24 October 2008
By Paul Dicken
Town hall leaders are confident that they can meet targets to pay small and medium-sized suppliers more swiftly, to help them through the economic slowdown.
Business Secretary Peter Mandelson announced a range of measures to support small and medium-sized enterprises on October 21. These included an agreement by government departments and regional development agencies to pay suppliers within ten days and a commitment to work with NHS trusts, local authorities and other employers in England to extend the target.
'Businesses tell us they need access to cash flow. That's why central government has committed to paying businesses within ten days — and we're urgently speaking to the wider public sector to extend this commitment. We want everyone in the supply chain to pay their bills more quickly,' he said.
A spokesman for the Local Government Association told Public Finance that a very high percentage of local authorities paid suppliers within 30 days and many within ten days. 'By and large we agree that small businesses are coming under pressure and it's a good way for local authorities to be able to help.'
He added a small proviso that the government should recognise if faster payment put an additional burden on local authorities.
David Harrison, vice president of Visa Commercial — which provides the Government Procurement Card used by around 1,200 public sector bodies — said payment to SMEs was typically made within four working days using the card system.
The government's announcement would amplify the message of prompt payment and help 'inject further liquidity' into local economies, he said. A spokesman for the British Chamber of Commerce said the target across the board was a 'noble quest' but 'whether or not it is achievable is yet to be seen'.
The chair of the Federation of Small Businesses, John Wright, said he 'welcomed all public bodies setting an example to the private sector by paying as early as possible'.
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