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Local government suppliers exposed to postcode lottery

The average time UK councils take to pay invoices to suppliers is almost double the 10-day target the government set it one year ago, but results varies widely from region to region.
Local government suppliers exposed to postcode lottery
Using the Freedom of Information (FoI) Act, the Forum of Private Business (FPB) asked the UK's councils how quickly they paid firms providing goods and services and 19 days was the average time it took them to pay up. The results also revealed 42% of UK councils paid up within 10 days.

The study also revealed major differences in how quickly British councils pay their suppliers. The average length of time for a UK council ranged from 18 days in England to 37.2 in Northern Ireland. The UK average for payment of bills within 10 days, varied according to the area with the figure as low as 11% in Northern Ireland and as high as 52% in the West Midlands.

Some authorities are settling more than 90% of their bills in ten days or less. However, some councils admitted that none of their suppliers received payment within 10 days. More than a dozen councils confessed they paid less than a tenth of their bills within the timeframe. Some councils had trouble paying invoices within even 30 days.

The research by FPB was timed to come one year after government urged local councils to settle invoices within 10 days to help smaller businesses maintain cash flows during the recession. Read article on Mandelson's 10 day rule
In light of the results, the FPB's national chairman, Noel Guilford said: 'While some local authorities took instant action in response to Lord Mandelson's calls for 10-day payment a year ago, this research appears to show that others are completely oblivious to it, even now. These figures reveal that businesses face a payment postcode lottery when carrying out local authority work. To most business owners, this will seem quite ridiculous - we're part of a national economy, we're in a national recession and you would expect a national policy on payment by public bodies'.
Noel Guilford added:'This isn't about 'council-bashing'. The vast majority of small firms doing business with local authorities can expect to be paid in a fraction of the time that they would when dealing with a typical big company. We would just like to see a little bit more joined-up thinking, perhaps from central government, in order to make sure that small firms on one side of the country aren't waiting twice as long for their bills to be paid as their counterparts on the other.'

The council which paid the most of its bills within 10 days was South Northamptonshire Council, on 91%. The authority also managed to settle invoices in an average of less than six days. The two councils which said 0% of payments were made within 10 days were Argyll and Bute in Scotland and Down District Council in Northern Ireland. Wakefield District Council in Yorkshire only managed to pay 1% of invoices within 10 days. Many small district councils reported much better payment performance than their larger, city-based counterparts.

Leeds City Council only managed to pay 13% of its bills within 10 days but the semi-rural Pendle Borough Council in Lancashire managed a figure of 87% and also signed up to the Prompt Payment Code. The FPB urges businesses to sign up to the government-backed PromptPaymentCode
The FPB asked local authorities for the most recent 12-month figures showing the percentage of bills settled within 10 days; the percentage of bills settled within 30 days and the mean average of time, in days, taken to settle bills. Most councils either provided data covering the period September 2008 to August 2009 or figures for the 08/09 financial year.  
13 November 2009


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