Six in 10 local authorities lack commitment to 30-day payment terms, ECA investigation finds
Late payments More than half (59%) of local authorities admit they have no plans to monitor whether supply chain payments take place within 30 days, an investigation by the Electrical Contractors Association has revealed. This potentially puts them in breach of the Public Contracts Regulations 2015, statutory guidance for which states that any subcontract awarded by a local authority contains suitable provisions to impose the payment of invoices within 30 days. A further 9% told the ECA that they re unaware if there are plans to do so.
Just 9% already monitor and report on whether their supply chain is being paid within 30 days. The revelations, which emerged in response to a Freedom of Information request issued by the ECA to local councils in England, also included news that 52% of councils have yet to build in a contractual requirement for payment to flow thorough the supply chain within 30 days, as required by law. A further 7% professed to be unaware of whether they did this or not. Some 28% said they have not and will not be building in a contractual requirement to ensure the supply chain is paid on time. It s the second time the ECA has asked local authorities about payment practices, having done so a year before in October 2015. There has at least been an improvement in the number of councils building in supply chain contractual requirements for 30-day payment (from 28% to 40%). A further 25% said they planned to insert contractual requirements, a provision for which has been in place for 18 months. However, there was a year-on-year increase in the number of councils insisting they would never build in contractual requirements for prompt payment (from 21% to 28%), in apparent contravention of the law. Our survey shows that many local authorities continue to ignore the legal requirements for prompt public sector payment along the supply chain, said ECA director of business and external affairs Paul Reeve.
It s particularly disappointing when one considers that doing so would support SMEs in their local areas. We have seen next to no improvement among many local councils since the ECA conducted a similar investigation last year. The government has issued regulations to help smaller businesses, but they are being viewed as optional by far too many councils, and too many are opting out. What we need is for government to approach those who flout the law and to make it harder for them not to comply, than to comply. The government could impose penalties to achieve this.
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