Government gets tough on late payment (again)
London, UK (20/07/2011)
Blimey, that was fast: itís just two weeks since shadow small business minister Chukka Umunna criticised the Government over the Ďscandalí of late payment, but the Coalition has displayed reflexes almost as speedy and impressive as Wendi Deng on the matter. Cabinet Secretary Francis Maude has just announced a raft of measures designed to ensure the Government's own suppliers, at least, pay on time. Credit where itís due (so to speak). To be fair, itís an issue on which the Coalition has a pretty good track record; but can it benefit the wider economy?
According to Maude, the new rules will mean the Government's largest contractors will have their payment records closely monitored by the departments they serve, while small businesses working with the contractors in question will be Ďencouragedí to report bad payment behaviour using a Mystery Shopper-style service; the complaints will then be published on the Cabinet Office website. Other new measure involves the Crown Representatives team, which co-ordinates key suppliers to the Government: apparently, this will Ďstrongly encourageí contractors to pay more quickly than 30 days.
Thereís no question late payment is a growing problem: according to a survey by Sage last month, more than a third of small businesses believe payments have got even later over the past six months, while the FSB says that the total amount owed to small businesses stands at £24bn. Not exactly small change.
Now donít get us wrong: any attempt to lead by example is, obviously, laudable (and itís certainly already doing that: apparently, its average payment period is just 10 days). But the problemís widespread Ė and if the Government truly wants to create a sea-change in the way businesses pay, suggesting that its suppliers, er, might, um, like to, er perhaps, think about, er, paying up sooner, probably wonít have the desired effect on non-Government suppliers. Although, as Tesco likes to say, every little helps - right?
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