Councils' slow payments cause suppliers to suffer


Council Building004By Rory Reynolds

SUPPLIERS to Scots councils are being squeezed because local authorities are failing to pay their bills within the Government’s suggested time limit.

On average, councils in Scotland paid just one quarter of bills within the Government’s suggested time limit – leaving small and medium-sized businesses struggling with their cash flow.

A Freedom of Information request by the Forum of Private Business has shown that barely a quarter of invoices were paid within the Government’s 10-day payment pledge in the past year.

The results showed that, on average, none of the 32 local authorities in Scotland had paid all of its bills within the 10-day target, with most taking the full 30-day limit.

Last year Lord Mandelson urged public bodies to pay small and medium sized firms within a ten day period, as many struggled to secure short term loans from Britain’s banks.But business leaders have blamed the Government for its “woeful failure” to ensure that councils pay their bills within the agreed period.

Woeful Failure

Phil McCabe, spokesman for the Forum of Private Business, said: “These figures make for quite disappointing reading.

“Many local authorities appear to be completely in the dark about the 10-day target.

“This suggests that there has been possibly a woeful failure on the part of central government to communicate its directive.”

Scots councils have been shown to have a worse record than south of the border, with Edinburgh City Council managing an average of just 14 days – the fastest in the survey.

Glasgow City Council paid just eight per cent of its bills within the suggested 10 day period, while South Ayrshire council took an average of 31 days.

Arygll and Bute said that it would not normally pay suppliers before its standard 28-day terms.

Finance minister John Swinney backed the time limits, saying: “It is vital that companies receive practical support of this kind, as we work to position Scotland’s economy for recovery.”

‘Council Bashing’

The invoices are for firms that supply local authorities with a range of services, including building work, repairs and catering.

David Lonsdale, assistant director at CBI Scotland said: “Some councils have taken welcome steps to support firms during the downturn.

“However, local government as a whole needs to raise its game on this issue to aid the many firms who undertake work on behalf of the wider devolved public sector.”

But the Convention of Scottish Local Authorities hit back, saying that critics were “council-bashing”, adding that most suppliers requested 30 days as standard.

A spokesman said: “It’s easy for the FPB to make such statements but the bottom line is that Scotland’s councils make strenuous efforts to pay invoices on time and their performance is measured by a statutory performance indicator published by Audit Scotland.

“Councils fully recognise the financial difficulties faced by many businesses, especially at this time, and are taking a wide range of measures to assist businesses in coping with the economic downturn.”

See more of our pictures at our Flickr site and videos at our dedicated channel,  Deadline TV.