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Insolvency threat of late government payments

Published on 1 Feb 2010 under category: legal

Research by the Federation of Small Businesses (FSB) and ICM found in a survey of 10,000 small companies that the government and its agencies such as the NHS made one in three payments late.

In 2008, the government pledged to pay its debts within ten days to help businesses suffering from poor cash flow in the recession.

Despite this, the firms tallied that 31 per cent of late payments were from central government, government agencies (30 per cent), EU institutions (30 per cent), local authorities (29 per cent) and the NHS (25 per cent).

The private sector accounted for 34 per cent of delayed payments.

John Wright, national chairman of the FSB, said: "It is shocking that after the Government put the Prompt Payment Code in place so many businesses are still being paid late.

"The public sector needs to take the lead in more than word alone and set an example that paying late isn't acceptable, as this problem persists in the private sector.

"Any business found to persistently breach the terms should be fined and be warned they may lose contracts in the future."

If you require information on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett.