Government payment pledge ‘a failure’, say small firms

3 February 2010

3 February 2010 | Amy Rowe

The UK government has failed to uphold its prompt payment promise, according to a report commissioned by the Federation of Small Businesses (FSB).

Despite pledging to pay suppliers within 10 days of receiving an invoice, central government departments and agencies make one in three payments late.

Local government bodies were found to settle 25 per cent of invoices late, while 29 per cent of NHS payments failed to meet the 10-day target, the FSB said.

The survey, which was carried out by ICM Research on behalf of FSB last year, asked just under 10,000 UK firms how long they had to wait for payment. It found that businesses also settled 34 per cent of invoices late. 

The impact of delayed payments was compounded by the recession, the FSB said, with 41 per cent of small businesses forced to dip into personal savings and 43 per cent making use of overdrafts as a result.

The business group was not the first to claim that the government’s 10-day payment pledge has failed. Credit agency Graydon's survey of 320 public sector suppliers last month found 98 per cent did not receive payment within the proposed time frame.

The findings come as the Office of Government Commerce (OGC) launched an awareness campaign to help small businesses compete for public sector contracts.

It published the first in a series of guidance documents this week on helping SMEs access deals, which will be followed by regional workshops on working with small suppliers.

Self-assessments of procurement capability carried out by the Home Office, Department for Communities and Local Government and the Department for Work and Pensions, published by the OGC last week, said the departments paid invoices in 10 days 99.73 per cent, 89.45 per cent and 97.10 per cent of the time respectively.

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