UK government chief commercial officer Gareth Rhys Williams has compared measures to exclude late payers with the smoking ban.
Rhys Williams told the Public Sector Solutions Expo in London there were doubts the 2007 smoking ban would be effective but it was a success, and he believed a similar process would take place with government action on late payment.
“There was a real thought around that the smoking ban would never work then two weeks later, it worked. We just need to make that mental leap,” he said.
Rhys Williams discussed how the Government Commercial Function (GCF) would be looking to strengthen payment practices in the next year to ensure suppliers are being paid fairly and in a timely manner.
Earlier this year, the government announced measures which would ensure vendors who fail to pay 95% of invoices within 60 days will be excluded from bidding on contracts worth over £5m a year starting from September 2019.
Rhys Williams said: “It is deliberately targeting the larger vendors. These are the guys who have the cash and we should be passing it down. We generally try to pay within 10 days or 30 days. To sit on the money for an extra 50 or 30 days is frankly not fair.
“The money tied up in supply chain finance should be going towards growing the company, towards training apprentices or investing in productivity but it is being tied up because of a lack of willpower.”
Rhys Williams said prompt payment had to become a focus for the GCF following the collapse of Carillion in 2018.
“The public sector response was unbelievable. Not a single public service stopped anywhere despite a huge vendor going bust. But it has left a political football in the shape of prompt payment because Carillion's payment practices were shocking.”
While the government’s Prompt Payment Code was implemented to ensure large businesses were paying suppliers within 60 days, no evidence had to be provided to back this up.
“Vendors signed up to it, they were bigging it up. But now we have data that they have to submit every six months and we find a lot of them, including some big household names, are just not doing it,” Rhys Williams said.
As well as excluding those businesses with poor payment practices, Rhys Williams said there would be an increasing naming and shaming exercise and urged those working in public procurement to research the payment practices of their vendors.
“We as public procurers can exclude people for not managing their supply chain properly,” he said.
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