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HVCA Newslink: Payment regime pleas ignored

Research carried out by the HVCA among its members suggests that calls for the public sector to improve its payment regime to suppliers are falling on deaf ears.
It was in October last year that business and enterprise secretary Lord Mandelson announced that central government would 'aim to pay its suppliers as soon as possible, and within ten days
at the latest'. And he went on to confirm that a similar policy was being adopted by other government agencies.

'Businesses tell us they need access to cash flow,' said Mandelson. 'That is why central government has committed to paying businesses within ten days - and we are urgently speaking to the wider public sector to extend this commitment.'

However, a survey carried out among HVCA members in the last quarter of 2008 and the first quarter of 2009 has revealed that public-sector clients are coming nowhere near to settling their invoices within ten days.

The purpose of the research was: first, to establish whether public-sector clients were paying their main contractors within ten days; and, secondly, whether those main contractors were
passing such payment terms on to their sub-contractors.

Of the association members that responded to the survey, only 12% of those who dealt directly with public-sector clients had been paid within ten days, while 39% had to wait at least 30 days, and 8% 60 days plus.

Respondents that acted as sub-contractors fared even less well - with only 10% receiving payment within ten days, 63% having to wait at least 30 days, and a further 10% waiting more than 60 days.

'Our findings strongly suggest that Lord Mandelson's edict has had little effect so far on payment performance,' said Martin Burton, HVCA vice president.

In a letter to then construction minister Ian Pearson, HVCA chief executive Robert Higgs recalled that the Department for Business, Enterprise and Regulatory Reform had asked all government
departments to produce quarterly statements of their payments to contractors.

'I should be grateful if you would provide me with the most recent statements, and also any feedback on this crucial issue,' Higgs added. As this edition of HVCA Newslink went to press, the
matter was being followed up with Ian Lucas MP, Pearson's successor.
1 July 2009

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