ECA Freedom of Information request shows local authorities still not meeting 2015 regulations.
The majority of local authorities (59%) are breaching their legal duty to ensure that their supply chain is paid promptly, making it harder for many thousands of small businesses to succeed, according to an investigation by the Electrical Contractors’ Association (ECA).
Back in September the ECA issued a Freedom of Information request to local councils in England about their payment practices, to establish whether they were meeting the requirements in the Public Contracts Regulations 2015. The key findings were as follows:
- Over five in 10 councils (52%) have not yet built in a contractual requirement for payment to flow thorough the supply chain within 30 days, as required by law. A further 7% say that they do not know if they do this.
- Over one in four councils (28%) say they ‘have not and will not’ be building in a contractual requirement to ensure the supply chain is paid on time.
- Less than one in 10 councils (9%) monitor and report on whether their supply chain is being paid within 30 days, in line with the law and the spirit of the law.
- Almost six in 10 councils (59%) say they will not be monitoring whether supply chain payment takes place within 30 days. A further 9% say they do not know if they will.
ECA Director of Business and External Affairs Paul Reeve commented: “Our survey shows that many local authorities continue to ignore the legal requirements for prompt public sector payment along the supply chain. It’s particularly disappointing when one considers that doing so would support SMEs in their local areas.
“We have seen next to no improvement among many local councils since the ECA conducted a similar investigation last year. The government has issued regulations to help smaller businesses, but they are being viewed as optional by far too many councils, and too many are opting out.
“What we need is for government to approach those who flout the law and to make it harder for them not to comply, than to comply. The government could impose penalties to achieve this.”
In October 2015 the ECA also asked local authorities about their payment practices. One year later, there has been an improvement in the number of councils building in supply chain contractual requirements for 30 day payment (from 28% to 40%). A further 25% said they planned to insert contractual requirements, though the provision has been in place for 18 months.
However, there was a year-on-year increase in the number of councils stating they would never build in contractual requirements for prompt payment (from 21% to 28%). This is in direct contravention to the law.
Statutory guidance about the Public Contracts Regulations 2015 states that ‘any subcontract awarded’ by a local authority ‘contains suitable provisions to impose’ the payment of invoices within 30 days.