Companies who fail to pay their suppliers on time could will be unlikely to win government contracts under a new initiative aimed at ‘levelling the playing field’.
Minister for Implementation Oliver Dowde announced the initiative to ensure all Government suppliers and subcontractors benefit from being paid on time.
It comes into force in Autumn 2019 and will ensure the government only does business with companies who pay their suppliers on time, many of which are small businesses. The move will promote a healthy and diverse marketplace of companies providing public services.
Cabinet Office Minister, Oliver Dowden said: “Companies providing crucial services to the public sector, like supporting prisons and delivering road infrastructure projects, must be paid on time.
Paying invoices promptly is vital in providing healthy cash flow, particularly for smaller businesses who are the backbone of the UK economy, to help them survive and thrive.
“From next year, if government contractors are late with supplier payments, they could stop winning public contracts altogether – until they clean up their act.”
Martin McTague, Policy and Advocacy Chairman for the Federation of Small Businesses (FSB), said: “This measure will get the thumbs up from the small business community. This sends a clear message from Government that paying late is not okay.”
James Roberts, Political Director of the TaxPayers’ Alliance, said: “Making the process more small business friendly delivers the double whammy of driving down costs and supporting enterprise. Taxpayers should welcome these changes, which will ultimately mean more competition, lower costs and better services.”
The government will also update its supplier complaints service to ensure business voices are heard.
Formerly called Mystery Shopper, the free and anonymous complaints service – now called the Public Procurement Review Service – helps suppliers of all sizes raise complaints and concerns about procurements they’re involved in or about the conduct of contracting authorities.
Prime Minister Teresa May has appointed a Small Business Champion minister in each government department with the aim of spending one pound in three with SMEs by 2022.