Cabinet Office minister Oliver Dowden said companies with a behaviour of late payment to suppliers “could” be prevented from winning government contracts from autumn 2019
The government has pledged from Autumn next year to consider blacklisting companies from public sector construction projects that are found to be paying their suppliers late.
The commitments have been made as part of a new initiative unveiled by Cabinet Office minister Oliver Dowden and follows ongoing campaigning from sectors such as the building services industry to push for payment reforms to try and protect their supply chains.
A statement from the Cabinet Office said that companies “could” be prevented from winning government projects for bad payment practices in what it called a first of its kind initiative.
Cabinet Office minister Oliver Dowden said the commitment would apply to all companies providing crucial public services such as work on infrastructure projects.
He said, “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.”
No details were given on the exact scope of the commitments, or how they will be enforced or reviewed at present.
Martin McTague, Chairman of policy and advocacy with the Federation of Small Businesses (FSB), said he welcomed the commitment by government to push a message that late payments would not be acceptable practice in business.
“Cracking down on big businesses supplying to government, and not paying on time, is a win for small businesses, tax payers, the wider economy and public services.”
“Measures to open up public procurement give tax payers and our public services access to the innovation and value small firms bring, as well as helping our economy. This is a challenge, and there is, of course, more to do, but FSB recognises the policy progress that is being made.”
Mr McTague said the FSB would continue to work with government on the late payment policy and other measures to protect supply chains on government projects.
Rob Driscoll, deputy director of business and policy for the ECA, took to social media to praise the announcement by government of efforts topunish late payments.
You can read more on payment and retentions reforms and the current challenges in trying to enforce better behaviours in the construction supply chain in the upcoming December edition of H&V News magazine.
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