A change to the EU Late Payments Directive may increase late payment from public sector construction clients, a leading trade body has warned.
The European Parliament and European Council have imposed a standard 30-day deadline for payments across the EU's member states – but the Forum for Private Business, which represents SMEs, has warned that many public sector bodies could now abandon the UK's own 10-day target, which was announced in 2008.
“Abandoning the UK's domestic 10-day payment target would be a significant step backwards in tackling the culture of poor payment,” said the Forum's chief executive Phil Orford.
"Central government departments, for example, are largely meeting the 10-day target and it is important that the UK's public sector continues to strive to set the standard for other countries and private companies to follow."
He added that the new legislation risks undermining work carried out in the UK that has led to some NHS trusts paying within the 10-day target – and could prevent others from improving their payment times.
Research carried out by the Forum has discovered some NHS trusts are paying more than 90% of their bills within 10 days.
Tameside Hospital NHS Foundation Trust in Lancashire emerged as the best-performing trust in England for 10-day payment, paying 94% of invoices within 10 days.
However, others are processing absolutely none in the timeframe – three trusts in London and the South East were joint worst on this count, all reporting 0% figures.
The Forum used the Freedom of Information Act to reveal the figures.
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