Government owes suppliers £6 billion

12 May 2009

13 May 2009 | Jake Kanter

The value of the UK government's unpaid bills totalled £6 billion over the past year, according to research by credit management firm Intrum Justitia.

The survey of 5,000 businesses in Europe found the UK public sector paid suppliers on average 20 days later than contractually agreed.

The study also found European companies and public bodies only settled 50 per cent of invoices within 30 days.

It is the latest indicator of poor payment practices during the economic downturn and comes despite repeated calls from government and business lobby groups to speed up invoice settlement.

Intrum Justitia claimed if all organisations in the UK public and private sector paid their bills on time, it would be the equivalent of a £39 billion cash injection into the economy.

Lars Wollung, CEO of Intrum Justitia, said: "On one hand we have governments across Europe pumping huge sums of money into their economies to increase cash flow yet, on the other, the same entities are not paying invoices on time.

"UK businesses and SMEs in particular are fighting for survival and an injection of £6 billion into the economy could prove a real lifeline."

The findings echo those of the Scottish National Party, which this week said UK government departments are failing to honour their 10-day payment pledge (Web news, 11 May 2009).

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