FOI requests probe public sector payment of SMEs

Every council and health trust across Britain is facing a Freedom of Information (FOI) request aimed at shaming those who are not paying their suppliers on time.

The move, which is set to ask questions of around 470 local councils and 240 health trusts, is being driven by the Forum of Private Business (FPB), which has a history of campaigning against companies guilty of making late payments - entering them into a 'hall of shame' on its website.

Organisations will have to set out their standard payment terms, and also reveal how many suppliers they paid within ten days, 30 days and over longer periods, over the last 12 months.

The FPB says that while central Government departments are generally managing to pay suppliers within ten days, small businesses are more likely to work for a local council or health trust.

FPB policy representative Matt Goodman said: "With the recession hitting home, being paid on time can mean the difference between success and failure.

"The issue of late payment is a huge one for smaller businesses, but many of them are reluctant to speak out about it because they are afraid of losing work."

Figures released in March by Bacs, the payment clearing service, showed that SMEs were owed £25.9 billion in overdue payments - up from £18.6 billion the previous year, despite the Government agreeing a code of conduct with businesses in December.

A spokesman for the Local Government Association told More Than Business News that he did not believe there was a general malaise among councils in paying their contractors.

"A lot of councils are paying their bills quicker during the recession to help small businesses," he added.

IMAGE AP Photo/Kevin Rivoli