UK government misses its own prompt payment targets

The UK Cabinet Office, which has been saying companies providing crucial services to the public sector such as supporting prisons and delivering road infrastructure projects must be paid on time, has been caught out on its own ruling.

According to City A.M., the number of businesses receiving late payments from the Cabinet Office has nearly tripled in the last two years, despite it imposing tough rules on its contractors who are paying their suppliers late.

Minister of State for the CO David Lidington revealed a nearly two-fold increase in the number of companies the Cabinet Office failed to pay on time between April to June 2016 and April to June 2018, from 76 to 227. A payment is considered late if it arrived after 30 days.

Lidington said the increase in late payments was due to a switch to a new computer platform in May 2017.

Jon Trickett, Labour’s shadow minister for the Cabinet Office, said the statistics sent a "worrying signal to businesses, who are looking to the Cabinet Office to provide leadership in addressing the problem of late payment."

Back in October 2018, Cabinet Office Minister for Implementation Oliver Dowden said: "We expect the highest payment standards from both government and big business. That is why we will commit to central government aiming to pay 90% of undisputed invoices from small and medium sized businesses within 5 days. Small firms can also report poor payment practices via our Mystery Shopper service, which ensures their voices are heard."

According to research by the Federation of Small Businesses, 37% of small firms have run into cashflow problems because of late payments, while almost one-in-three has had to turn to an overdraft and 20% have seen a slowdown in profit growth.

We wonder how many reports of poor payment practices have been lodged against the Cabinet Office.

Small Business Commissioner Paul Uppal had come up with a "traffic light system" to name and shame big companies who pay their suppliers late. The Sunday Times noted that the “red” signal will be used to publicize serial late offenders, and companies that do not post payment terms, as mandated in the U.K., twice per year. The Federation of Small Businesses said about 84% of business owners are paid late.

What we're interested is how the UK government will respond to this with action, and not rhetoric. And also how quickly the Cabinet Office can pay the affected companies, so it can walk the walk.

What do you think of this double standard? Do leave a comment below or on our Facebook page.