Government to beef up prompt payment to suppliers

A new advisory board of industry representatives has been tasked with strengthening rules to ensure small firms get paid on time.


A new advisory board of industry representatives has been tasked with strengthening rules to ensure small firms get paid on time.

The government has a number of large suppliers, including IT firms such as Capita, HP, Atos, Oracle, Fujitsu, Capgemini and CGI, all of whom use smaller firms as sub-contractors. 

The board, which met for the first time yesterday, will work to beef up the ‘Prompt Payment Code’, which commits signatories to pay suppliers on time, give them clear guidance on procedures and encourage good practice through their supply chain.

The board comprises members such as Bury Council, City of London Corporation, Fujitsu, Barclays, Aviva and the CBI [Confederation of British Industries].

About 250 public sector bodies, including all big Whitehall departments and most major local authorities, have signed the code, which was set up in 2008. A number of the major IT suppliers to government including HP, Fujitsu and Capgemini have also signed up. 

The representatives were selected “because of their good reputations on payment practices”, according to the Department for Business, Innovation and Skills (BIS).

The group will examine ways to improve monitoring and enforcement of the code, promote awareness of it, and advise if there is a need for it to be updated, the department said. It will aim to implement concrete proposals in spring 2015.

The code is part of a wider push for SMEs to gain 25 percent of central government spending by 2015.

The latest publicly available figures, for 2012/13, show that Whitehall spent 19.9 percent of its budget on SMEs that year, though just 10.5 percent of this was direct spending.

ComputerworldUK understands that up-to-date figures for 2013/14 are due to be published by the government next month.

The government is also currently pushing legislation through Parliament to require large companies to report on their payment practices, BIS said.

The ‘Small Business, Enterprise and Employment Bill’ will include a provision for the government to implement further reforms to public procurement in future, such as a duty to accept electronic invoices.

The bill will also encourage the public sector to run efficient and timely procurement processes and require them to send any potential supplier the information needed to apply for a contract free of charge.

Business minister Matthew Hancock said: “Late payment continues to plague businesses, putting a strain on cash flow and preventing plans for growth.

“We have committed to tackling this problem, but there is no silver bullet. This is about a change in culture, which needs businesses and government to work together.”