By David Williams
27 November 2009
European Union proposals to impose tougher sanctions on public bodies that pay their suppliers late are putting £600m of taxpayers’ money at risk, local authorities have warned.
The EU is considering recommendations to bolster its late payments directive, which is planned for implementation in 2010.
If approved, private firms would be allowed to charge 5% fines, plus interest and administration costs, from public sector organisations whose payments were more than 30 days late.
The Local Government Association and NHS Confederation, who jointly oppose the plans, estimated that a body that pays a £10,000 bill after 31 days could be charged an additional £623.88. Added bureaucracy could cost the taxpayer even more, with the total bill reaching £600m, they said.
David Parsons, chair of the LGA’s improvement board, said the system was open to abuse, and could entitle firms to impose fines even when invoices were missing information or had been wrongly addressed.
‘These plans will lead to less money going into frontline services and more going into the pockets of bureaucrats and lawyers,’ he said. He accused the European Commission of ‘sleepwalking into an unfair and grossly disproportionate system that hits key public services’.
Authorities are also angry that private firms competing with the NHS to provide health services will be exempt from the fines.
When the new directive was proposed in April, the commission said late payments by public bodies were to blame for otherwise sound businesses going bust.
27 November 2009
European Union proposals to impose tougher sanctions on public bodies that pay their suppliers late are putting £600m of taxpayers’ money at risk, local authorities have warned.
The EU is considering recommendations to bolster its late payments directive, which is planned for implementation in 2010.
If approved, private firms would be allowed to charge 5% fines, plus interest and administration costs, from public sector organisations whose payments were more than 30 days late.
The Local Government Association and NHS Confederation, who jointly oppose the plans, estimated that a body that pays a £10,000 bill after 31 days could be charged an additional £623.88. Added bureaucracy could cost the taxpayer even more, with the total bill reaching £600m, they said.
David Parsons, chair of the LGA’s improvement board, said the system was open to abuse, and could entitle firms to impose fines even when invoices were missing information or had been wrongly addressed.
‘These plans will lead to less money going into frontline services and more going into the pockets of bureaucrats and lawyers,’ he said. He accused the European Commission of ‘sleepwalking into an unfair and grossly disproportionate system that hits key public services’.
Authorities are also angry that private firms competing with the NHS to provide health services will be exempt from the fines.
When the new directive was proposed in April, the commission said late payments by public bodies were to blame for otherwise sound businesses going bust.
