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Public clients failing on prompt payment, research shows

Public sector clients are consistently failing to adhere to statutory prompt payment laws, according to new research.

More than half of 294 building engineering services specialists working directly for state-funded clients said they were typically waiting more than 30 days for invoices to be settled.

Regulation 113 of the Public Contracts Regulations 2015 requires every public contract awarded to contain provisions requiring valid and undisputed invoices to be paid within 30 days.

But in a survey run by the Electrical Contractors’ Association, the Building Engineering Services Association and Scottish electrical trade body Select, just 43 per cent of those polled and working direct for the public sector said they were typically paid within that timeframe.

A wait of 31-59 days was said to be standard for 46 per cent of those polled, with 11 per cent reporting they typically waited even longer.

A joint statement from ECA business director Paul Reeve and BESA legal and commercial director Rob Driscoll, who is also an adviser to the Cabinet Office, said: “In businesses of any size, late payment stifles investment and innovation.

“Yet our survey shows that far too many public sector bodies are still ignoring the legal requirement to enable prompt public sector payment along the supply chain.

“Quite simply, we need the government to toughen up the tools and measures in place to ensure these bodies do not flout the law, and instead comply with it.

“Doing so will help construction firms and other businesses to grow, increase productivity and invest in areas like skills and building information modelling.”

Elsewhere the survey found that 61 per cent of engineering services firms had seen material costs rise in the final quarter of 2016, while 39 per cent had seen labour costs increase.

A Cabinet Office spokesperson said: “The government has a longstanding policy commitment to pay 80 per cent of undisputed and valid invoices within five days, with the remainder paid within 30 days.

“We recognise the importance of supporting businesses, particularly small businesses, throughout the supply chain.

“That is why we have implemented a package of measures to tackle late and unfair payment including increasing transparency around payment performance and improving the government’s Mystery Shopper service to better investigate issues of payment performance.”

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