Councils ignore prompt payment law
9th December 2016
UK: The majority of local authorities in the UK are flouting government prompt payment laws, according to a new report by the Electrical Contractors’ Association (ECA).
A freedom of information request to local councils in England is said to have revealed that 59% are flouting the law requiring contracting authorities to ensure that every public contract contains suitable provisions to pay invoices within 30 days.
Asked whether they were meeting the requirements in the Public Contracts Regulations 2015, the FOI request found 52% had not yet built in a contractual requirement for payment to flow thorough the supply chain within 30 days. A further 7% were unaware that they were required to do this.
Only 9% said they monitored and reported on whether their supply chain is being paid within 30 days. Worryingly, 28% said they had no intention of building in a contractual requirement to ensure the supply chain is paid on time.
“Our survey shows that many local authorities continue to ignore the legal requirements for prompt public sector payment along the supply chain. It’s particularly disappointing when one considers that doing so would support SMEs in their local areas,” said ECA director of business and external affairs Paul Reeve.
“We have seen next to no improvement among many local councils since the ECA conducted a similar investigation last year. The government has issued regulations to help smaller businesses, but they are being viewed as optional by far too many councils, and too many are opting out.
“What we need is for government to approach those who flout the law and to make it harder for them not to comply, than to comply. The government could impose penalties to achieve this.”
In October 2015 the ECA also asked local authorities about their payment practices. One year later, there has been an improvement in the number of councils building in supply chain contractual requirements for 30 day payment (from 28% to 40%). A further 25% said they planned to insert contractual requirements, though the provision has been in place for 18 months.
However, there was a year-on-year increase in the number of councils stating they would never build in contractual requirements for prompt payment (from 21% to 28%). This is in direct contravention to the law.
