SNP breaks own rules by failing to pay up on time
THE Scottish Government is failing to pay its bills on time – sparking fears it could be driving small firms out of business.
Strict rules state that any contractor who completes work for the Government should be paid within 30 days.
The same rules mean any big businesses with government contracts should pay subcontractors for those projects in the same time-frame.
However, despite repeated promises of prompt settlement, the Government has failed to meet its payment deadline for almost 1,700 valid invoices.
A recent survey found that nearly three quarters of subcontractors on government construction projects were not paid on time.
Business leaders and opposition politicians accused Ministers of driving firms to the wall by failing to honour their promise to settle bills on time and for not ensuring contractors pay up promptly.
The Tories pledged to tighten the rules to bar late payers from taking on public work.
Scottish Conservative finance and economy spokesman Liz Smith said: ‘Late payments to suppliers is an issue the SNP have failed to get on top of for far too long. They are failing to meet their own rules that were set up in the early days of them arriving into power.
‘As we look to accelerate our economic recovery, this simply cannot continue. The Scottish Conservatives would introduce penalties to blacklist companies who repeatedly fail to pay their supply chains, temporarily banning them from bidding for public contracts.’
She added: ‘Quite rightly, businesses expect to be paid on time, not least because their work forces depend on that income.’
Last night Andrew McRae, the Federation of Small Business Scotland’s policy chairman, said: ‘Thousands of good Scottish businesses go bust every year because of late payment. They simply don’t have the resources to wait for big companies to do the right thing and pay up.
‘It is even more frustrating when local firms don’t get paid on time when they’re a subcontractor on a public sector project backed with taxpayer cash.’
He added: ‘We need to see more effort from governments north and south of the Border to help us end the chronic late payment culture that plagues our small business community and forces successful firms under.’
In 2009, then First Minister Alex Salmond oversaw a change in government rules to ensure contractors must be paid within 30 days.
Between November and December last year, the Government conducted a survey of suppliers to the public sector.
Its report said: ‘We asked respondents if they had always been paid within 30 days when delivering contracts as a subcontractor. Of 391 respondents, 54 per cent answered “no”. Of the 92 responses from construction firms, almost three quarters (74 per cent) indicated they had not always been paid within 30 days when delivering contracts as a subcontractor.’
A Scottish Mail on Sunday investigation found that, since 2016, the Government has failed to meet its 30-day deadline for 1,694 valid invoices. A further 1,426 disputed invoices were paid late.
Ministers have introduced project bank accounts for construction contracts, meaning all parts of the supply chain are paid directly.
However, these only apply to contracts worth more than £2 million, reduced from £4 million.
Professor Rudi Klein, a leading campaigner against construction payment abuse, said the system should be extended to cover smaller projects too.
He said: ‘I would like to have legislation in Scotland where we have project bank accounts for projects over half a million pounds. An alternative would be to have a digital platform, where the client body such as the Scottish Government will pay all subcontractors directly via a digital platform.’
A Government spokesman said: ‘The Scottish Government directly spent £369 million on goods and services to support delivery of public services in 2019-20, paying 99 per cent of valid invoices within ten days. We are working with contractors, and continue to collaborate with the Construction Leadership Forum, to monitor payments throughout the supply chain.’
‘Thousands go bust because of late payment’