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Government misses own prompt payment target

The Cabinet Office has slowed its payment of invoices since June 2017 and has not hit its own prompt payment target for over a year.

In 2015, the government pledged to pay 80 per cent of its invoices in five days and the remaining 20 per cent within 30 days.

New data shows the Cabinet Office has not come close to meeting this target since June 2017 and the proportion being paid on time has been on a downward trend since then.

Data covering April 2017 to March 2018 was published this morning, hours after Construction News revealed that 12 months of data was missing.

The newly published data showed a big drop off in promptness of payment between the second and third quarter of 2017. A downward trend in the speed of payment has persisted since then.

A Cabinet Office spokesman blamed the drop off in performance on the move to a new finance system, but said the department had “resolved the situation and are confident about meeting future targets”.

Labour shadow Cabinet Office minister Jon Trickett said the figures would worry businesses who hoped to see the government lead the way on better payment practices.

“This marked and long-term decline sends out a worrying signal to businesses who are looking to the Cabinet Office to provide leadership in addressing the problem of late payment,” Mr Trickett said.

“The Conservative government has failed to do this, and they must provide an explanation as to why the situation has deteriorated in this key strategic department.”

The Cabinet Office’s poor performance comes as the government threatens harsher penalties for companies who fail to pay on time.

From autumn, firms that fail to pay their supply chain on time could be barred from winning public sector contracts.

Some contractors have hit back at the government and its own payment practices however, with Laing O’Rourke chief executive Ray O’Rourke calling for it to “settle its accounts promptly”.

Poor payment practices have come to the fore over the past year following the collapse of Carillion.

In December the business select committee’s inquiry into small business and productivity found poor payment was holding back growth and causing companies to fail.

Its report called for the small business commissioner be given powers to deal with payment complaints in the construction industry and for abuse of retentions to be tackled.

A survey of 100 MPs by the Association of Accounting Technicians released today revealed almost one in four support a radical new approach to prompt payment enforcement. 

Around 73 per cent of MPs from across the political divide said they supported the prompt payment code being mandatory for firms with more than 250 workers, for maximum payment terms for private firms to be halved from 60 to 30 days, and for persistent late payers to be fined.

AAT head of public affairs and public policy Phil Hall said: “Government action to tackle this problem, from the voluntary payment code to compulsory but feeble reporting requirements – as well as the creation of a Small Business Commissioner with no real power – have all predictably failed to stem the scourge of late payments.

“With almost three-quarters of MPs from across the political divide supporting AAT’s recommendations for payment reform, it’s very difficult for the government to continue to drag their heels and back the status quo.”

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