4 May 2018

With the vast majority of public sector suppliers hit by late payments, the Federation of Small Businesses (FSB) wants the Government to introduce penalties for departments, agencies and public bodies who fail to pay invoices on time.

Those same departments, agencies and public bodies should also be forced to automatically pay interest on any payments made later than contract terms, the FSB insists.

According to new research by the Federation, 89% of public sector suppliers have been paid late, whether they have contracts with central government (88%), local government (91%) or a public infrastructure project (91%).

Describing the findings as a shocking failure in the public sector, FSB National Chairman Mike Cherry called on the Government “to get a grip” and help stamp out the poor payments culture that is, in his view, “running rampant in the UK economy”.

It is unfair and unacceptable that so many small firms are being forced to wait for money they are owed for work completed for the public sector, Mr Cherry argued.

Calling on the Government to lead by example and ensure that small public sector suppliers are paid promptly on completion of their work, he said that, by improving public sector payment practices, the Government can bring some fairness to the public procurement process and help reduce the risk for small businesses of taking on public sector contracts.

That would also prevent Carillon-type practices happening again, Mr Cherry added, and would be a win-win for everyone involved in the supply chain because, when small businesses are used effectively, they are able to create jobs and growth.