9 in 10 councils ignoring duty to protect supply chain

19/07/2018

Local authorities have come under fire by trade bodies for ignoring their duty to protect the supply chain from late payment.

Public Contracts Regulations 2015 state that 30-day payment down the supply chain is mandatory, and that public bodies should take steps to ensure this takes place.

However, a Freedom of Information data, obtained by the Electrical Contractors Association (ECA) and Building Engineering Services Association (BESA), revealed that nine in 10 local authorities are breaching these regulations by failing to monitor if their supply chain is getting paid within 30 days.

Almost half (49%) said that they did not have, or did not know if they had, a contractual requirement to pay in this timeframe.

And one in five (18%) said they had no intention of including this in future contracts.

This echoes research from the Federation of Small Businesses (FSB) earlier this year which revealed that 89% of public sector suppliers have been paid late. This is true both for suppliers to central government (88%), local government (91%) and those supplying public infrastructure projects (91%).

“Unacceptable”

At a time when the government claims to be tackling late payment and levelling the playing field for smaller businesses through initiatives such as the appointment of the Small Business Commissioner, the introduction of payment reporting regulations and plans to ban late payers from bidding on government contracts, trade bodies are disappointed that councils are failing to lead by example.

ECA deputy director of business and policy Rob Driscoll said: “Non-compliance by the public sector with the Public Contracts Regulations is unacceptable.

“This is especially significant given the cautionary tale of the collapse of Carillion – one of the key strategic suppliers to government – which ultimately had a wider impact on SMEs.

“If government purports to support fairer payment practices, these findings show that there is work to be done.”

BESA public affairs and policy manager Alexi Ozioro said: “We applaud the government for engaging with the poor payment debate, but it is about time action matched words.”

What do you think? Should local councils be setting a better example? Let us know in the comments below.