The Cabinet Office has been singled out by the chair of the Public Accounts Committee, Margaret Hodge, for failing to ensure departments pay businesses on time.
Hodge’s remarks follow the release of the National Audit Office (NAO) report Paying government suppliers on time, which concluded that the government’s 2010 commitment to pay 80% of undisputed invoices within five working days was not having the “intended effect of helping the UK’s five million small and medium-sized enterprises (SMEs).”
Hodge said: “Small and medium-sized enterprises have a vital role to play in the UK’s economy. Yet government is not getting the basics right when it comes to promptly paying small and medium-sized enterprises, from which it directly buys £4.5 billion of goods and services each year.
“The Cabinet Office, representing the centre of government, should be doing much more to improve current poor practice in departments, which can put SMEs out of business and jeopardises government’s ability to deliver value for taxpayers’ money.”
Responding to the NAO report, the Cabinet Office told CSW that steps were being taken to ensure that businesses were paid promptly.
A spokesperson said: “The report recognises that we are making progress, but there is more to do. That is why from this month we are insisting on prompt payment within 30 days all the way down the public sector supply chain.”
This new legislation will be enforced via the Cabinet Office’s Mystery Shopper service, which already investigates and corrects poor practices in procurement including late payment issues.
The spokesperson added: “As part of our long-term economic plan this government is reforming public sector procurement, saving taxpayers £5.4 billion last year alone compared spending before the last general election.
“Our reforms are supporting suppliers of all sizes and we have substantially increased the proportion of business won by small firms."