9 Out of 10 Councils Break Payment Rules

  • Published on: 8 August 2018
  • By: Dale Wardill

Latest news reported shows how the Public Sector supply chain faces a constant uphill battle to get paid on time. Not that this will be much of a surprise to most of us…

It is reported that almost 9 in 10 Local Authorities are failing to monitor if their supply chain is getting paid within 30-days, breaching Whitehall regulations to ensure prompt payment. The findings that councils are ignoring their duty to protect the supply chain emerged on the six-month anniversary of Carillion’s liquidation.

Freedom of Information data obtained by specialist contracting trade bodies – the Electrical Contractors Association and Building Engineering Services Association – also revealed almost half of Local Authorities do not have, or don’t know whether they have, a built-in contractual requirement for 30-day payment.

Also worryingly, nearly one in five councils also said they had no intention of building in contractual requirements for 30-day payment terms, which doesn’t seem the most supportive view for local SME businesses.

This all flies in the face of Public Contracts Regulations 2015 which states that 30-day payment down the supply chain is mandatory, and that public bodies should take steps to ensure this takes place.

Rob Driscoll, Deputy Director of Business and Policy at ECA, said: “Non-compliance by the public sector with the Public Contracts Regulations is unacceptable.

“This is especially significant given the cautionary tale of the collapse of Carillion – one of the key strategic suppliers to Government – which ultimately had a wider impact on SMEs.

Carillion collapsed into compulsory liquidation in January. It was later revealed the heavily indebted group owed suppliers tens of millions of pounds in unpaid fees and cash retentions to its supply chain. It seems lessons have not been learnt and Central Government will need to intervene to ensure the supply chain gets a much fairer deal than it does currently.

The original article by Aaron Morby can be found here