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Local authority payment times still delayed

Local authority average payment times to suppliers have barely improved in three years, new research shows.

A nationwide study to determine how long local authorities in England take to pay supplier invoices has shown just marginal improvements in average payment times since 2009.

The Forum of Private Business carried out identical research three years ago, yet despite government-imposed targets for councils to pay suppliers within 10 days, on average only 51 per cent of council invoices in the 2011/12 year were settled within this time frame. That compares to 45 per cent in 2009.

The data also reveals suppliers are now paid, on average, after 17.5 days – a fractional improvement from 2009 when it was 17.9.

The research, which was carried out using Freedom of Information requests issued between May and July, also points to something of a postcode lottery up and down the country for suppliers, ranging from excellent to dire.

On the whole, councils in the North West were the quickest payers, while those in Yorkshire were the worst.

“Despite all the pressure from Central Government for public bodies to settle bills in less than 10 days, very few councils are coming even close to this target, and that’s disappointing,” said Forum’s Chief Executive, Phil Orford.

“In the space of three years we have seen an average improvement of less than half a day in the time it takes local authorities to pay their dues. This again is poor.

“That said, at least the movement is in the right direction, but should we be thrilled at such a small improvement?”

While the research highlights problems with prompt payment right across the country, there were some good news stories. The figures show a number of councils paying extremely high percentages of their invoices in under 10 days.

Tonbridge and Malling were the best performing for this indicator at 97.1 per cent, with South Northamptonshire second on 96.1 per cent, and Waverley third on 94.2 per cent.

The worst performing council for payment in under 10 days was Ashfield District Council in Notts with just 0.9 per cent of invoices paid within this timescale.

Overall, just eight councils indicated that the average time taken to settle bills was over 30 days, with Worcestershire County Council by far the slowest payer – taking 65 days on average to settle up.

Worcestershire reported fairly average response times for the proportion of bills paid within 10 and 30 days indicating that there may be a small number of contracts that were paid very late.

Leicester were in the bottom 10 of proportion of bills paid within 10 and 30 days, although the average time taken to settle their bills was 28 days, putting them just outside the bottom 10. North East Lincolnshire and Hammersmith and Fulham were also highlighted as consistently slow payers by the research.

Added Mr Orford: “We think the results show that while many councils like to boast that they understand the need to pay suppliers quickly, clearly they don’t. What’s more,  it is self-evident many don’t appreciate the value of prompt payment to small firms. With some exceptions, local authorities are not making meaningful progress on speeding up their payment practices.

“In a full three years, with the economy bouncing along the bottom the whole time, payment times have improved by an underwhelming 0.4 days on average. That’s just not good enough, and really those councils who average longer than 30 days need to re-evaluate their payment systems from the top down. And there are many.”

He added: “Late payment is a curse for many small firms, and if local councils can’t get it right with all the resources at their disposal, then the private sector will always have an excuse for not doing so either.

“We must have leadership from the public sector to show how it can and should be done, and Government must continue to pile on the pressure in order that they do.”

In conclusion he praised those councils which had bucked the trend and were paying promptly.

He said: “While the results have been disappointing, there are some excellent examples of councils paying in exceptionally quick times. We think Northamptonshire’s 4-day average payment time is exceptional, and suggest that the Local Government Association consider making them a beacon council in prompt payment. There are many authorities who could learn a lot from their example.”

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