Half of councils flout prompt payment law

9 December 2016

Half of councils are failing to meet prompt payment regulations, a study has claimed. 

The Electrical Contractors’ Association (ECA) said 52% of councils have not built into their contracts provisions to ensure their supply chain is paid on time.

The Public Contracts Regulations 2015 not only require first tier contractors to be paid within the 30 days, it also stipulates that contracts should include provisions to enforce the payment of subcontractors within the same timeframe. 

The findings are the result of a series of freedom of information requests made to councils by ECA.

It also found that 28% of councils said they would not be building these requirements into their contracts. Another 7% said they did not know if these provisions were in their contracts or not. 

Less than one in 10 councils (9%) actually monitor and report on whether payments make their way through their supply chain on time.

The failure to implement these provisions was disappointing because prompt payment from council contracts would support local SMEs, said Paul Reeve, director of business and external affairs at ECA. 

“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,” he said. 

Reeve called on government to approach councils who flouted the law and make it harder for them not to comply.

The Public Contracts Regulations were introduced to implement changes in EU public procurement law. The prompt payment requirements were included to make public contracts more accessible to SMEs.

Earlier this year the minister for small businesses wrote to signatories of the Prompt Payment Code to tell them the government was “leading by example” in its commitment to pay within 30 days.

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