Government Subcontractors and Suppliers: Payment

Cabinet Office and the Chancellor of the Duchy of Lancaster – in the House of Commons on 24th April 2019.

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Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

What steps he is taking to ensure that all Government suppliers and subcontractors are paid on time.

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

It is important to all suppliers, not least small businesses, that they are paid on time. That is why I have announced that, from this September, we will exclude suppliers from winning contracts if they fail to pay their subcontractors on time. Just this month, I contacted all suppliers to remind them of this intention.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I welcome what the Minister has just said, but a significant proportion of Government procurement is on construction projects, where there are often poor payment practices, such as those exposed during the collapse of Carillion. The Federation of Small Businesses’ “Fair Pay Fair Play” campaign, which carries the message that everyone deserves to be paid on time, is asking for those projects to be made the subject of separate project bank accounts. Is the Minister considering that?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

Yes. My hon. Friend raises an important point. The Government already use project bank accounts on all construction projects, unless there are compelling reasons not to do so. That is just one way of ensuring our underlying objective of prompt and fair payment. It sits alongside initiatives such as paying our suppliers on time, excluding late payers and appointing prompt payment non-executive directors in all Departments.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

Bearing in mind that small businesses are the backbone of our economy, will the Minister outline when we can expect to see the follow-through of the proposed policy whereby suppliers will be unable to win Government contracts unless they are seen to be making prompt payments?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

The hon. Gentleman is absolutely right to remind the House of that commitment. I announced in November that we will be bringing that policy into practice from September this year. The policy will mean that companies will face being excluded from Government contracts if they fail to pay their suppliers on time in two consecutive quarters.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

Which Government Departments have the best record in paying their suppliers on time, and which have the worst?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

I can tell my hon. Friend that the latest data shows that 10 of the 16 Government Departments were meeting the target of paying 90% of suppliers within five days, and 10 were also meeting the target of at least 96% of invoices within the 30-day target, so there is a good record overall.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office), Shadow Lord President of the Council

The Minister’s own Department has seen a threefold increase in late payments over the last couple of years. As we know, the Government are diverted from their day jobs with daydreams of a new Prime Minister, and this distracted Government are raising incompetence to a completely new level. We have seen that they are careless when paying small and medium-sized enterprises that provide services to the public, and those SMEs are the backbone of our economy. Yet the Government are very careful when it comes to outsourcing to wounded giants such as Interserve or failed dinosaurs such as Carillion. Is it not time that the Minister and his Department got their act together?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

I assure the hon. Gentleman that I am dreaming of nothing but securing my right hon. Friend the Prime Minister in her continued position as Prime Minister.

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

Sadly, I do not have a note on that point.

I can also reassure the hon. Gentleman on his point regarding prompt payments in my own Department, the Cabinet Office. According to the latest figures, in March we paid 88% of all our suppliers within five days and 98% within 30 days—a perfectly credible record.