Public procurement research reveals ‘postcode lottery’ for council suppliers
A study undertaken by the Forum of Private Business (FPB) has revealed vast differences in the amount of time British councils take to pay their suppliers.
Using the Freedom of Information (FoI) Act, the FPB asked local authorities across the UK how quickly they pay firms providing them with goods and services. This research was timed to come a year after the Government urged town halls to settle invoices within 10 days in order to help smaller businesses maintain their cash flows during the recession.
However, it found massive variations in payment practices across local government. Some authorities are settling more than 90% of their bills in 10 days or less, others have proactively signed up to the Government’s Prompt Payment Code and made concerted efforts to speed up payments to aid local companies.
Other councils, however, appear oblivious to the 10-day target. Some admitted that none of their suppliers received payment within 10 days, while more than a dozen paid less than a tenth of their bills within the timeframe.
Overall, the average time local authorities take to pay invoices was almost double the 10-day target, at 19 days. The UK average for the payment of bills within 10 days was 42%, but stark regional variations meant that this figure was as high as 52% in some areas and as low as 11% in others.