Monday 7 January 2019 3:00 pm

Cabinet Office fails to meet its own late payment targets despite private sector crackdown

The Cabinet Office has missed its own targets on paying invoices on time for more than a year, despite imposing tough new rules on its own contractors who pay suppliers late.

New data shows the department, which has promised to pay 80 per cent of invoices in five days and the remaining 20 per cent in 30 days, failed to do this since 2017.

Statistics show the Cabinet Office has missed the 30-day deadline on around 10 per cent of its payments since October 2017. It has also missed its initial five-day deadline on around one-quarter of invoices since that time.

The collapse of public sector outsourcing giant Carillion, which owed around £2bn to 30,000 suppliers, subcontractors and other short-term creditors when it failed in January, has thrust the issue of late payment into the spotlight.

It has seen Whitehall ramping up its own rhetoric on the issue, threatening to prevent serial late payers in the government’s supply chain from winning public contracts altogether from Autumn.

Cabinet Office minister Oliver Dowden announced the tough new measures late last year, saying it was “vital” that smaller companies providing public services like supporting prisons and delivering road infrastructure projects are paid on time.

“From next year, if government contractors are late with supplier payments, they could stop winning public contracts altogether – until they clean up their act,” he said.

But Jon Trickett, Labour’s shadow minister for the Cabinet Office, said today’s statistics sent a “worrying signal to businesses, who are looking to the Cabinet Office to provide leadership in addressing the problem of late payment”.

“The Conservative government has failed to do this, and they must provide an explanation as to why the situation has deteriorated in this key strategic department,” he said.

According to think tank the Institute of Directors, late payments puts 50,000 small firms out of business each year in the UK, costing the economy an estimated £2.5bn. 

In December, the government’s influential Business, Energy and Industrial Strategy Committee published a report claiming poor payment practices were damaging small businesses’ ability to grow.

A Cabinet Office spokesperson said: “We experienced technical issues when moving to a new finance system, but have resolved the situation and are confident about meeting future targets.”