New research from the Federation of Small Businesses (FSB) has “shone a light on the poor payment practices” that affect public-sector supply chains and put many small firms at risk.
The FSB’s latest data shows that 89% public-sector suppliers have been paid late.
This applies to suppliers to central government (88%), local government (91%) and those supplying to public infrastructure projects (91%).
While the FSB has welcomed steps announced by the Government to widen access to public procurement, it is calling for urgent action to address late payments to those small businesses that have won Government contracts.
The FSB wants the Government to introduce penalties for departments, agencies and public bodies that fail to pay invoices on time; it also wants departments, agencies and public bodies to be forced to automatically pay interest on any payments made later than contract terms.
FSB national chairman Mike Cherry said: “Our research highlights a shocking failure in the public sector.
The Government needs to get a grip, if we are to have a chance of stamping out the poor payments culture that is 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.
“By improving public-sector payment practices, the Government can bring some fairness to the public procurement process and help reduce the risk of public-sector contracts for small businesses.”