Public sector fails to set prompt payment example

22/02/2016

With the government pledging to tackle Britain’s late payment culture you’d expect the public sector to be leading by example. But new research suggests that late payment by public sector bodies is getting worse rather than better.

In 2015 nearly two-thirds (62%) of invoices owed by public sector bodies were paid late, according to a study by MarketInvoice, marking a significant increase from 45% in 2014,.

The report analysed over 20,000 invoices taken from debtors across the world in the last five years and found that the public sector has a worse record than FTSE 350 companies (61% paid late), banks (45%) and tech companies (51%).

Companies owed money by public sector bodies, including local authorities and councils, educational institutions, the NHS, the Bank of England and central Government departments, are paid on average nearly one week late (6.3 days).

While 31% are paid more than two weeks late, 11% are forced to wait over a month beyond agreed terms for payment.

The State of Late Payment report revealed educational institutions have a particularly poor payment record, with eight out of 10 payments by schools, colleges and academies made late last year – at an average of 17.9 days beyond agreed terms.

In recent years the government has committed to tackling late payment through initiatives such as strengthening the Prompt Payment Code and implementing tougher reporting laws.

But, in a Parliamentary debate last month, Small Business Minister Anna Soubry admitted that the Government is failing to lead by example.

She said: “I am going to say something slightly controversial and be very blunt… it says on my brief, ‘Government is leading by example by paying its suppliers fairly and promptly’. I wonder whether we really are.

“Shall we be truly honest about this? I have examples of local authorities that are not doing that. I have an example that was brought to me – I will not go into the detail of it now, but I will be taking it up in a serious way.”

What do you think? Should the public sector be setting a better example? Please share your views and experiences in the comments below.