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Local Government: Billing

Volume 495: debated on Tuesday 7 July 2009

To ask the Secretary of State for Communities and Local Government by what means his Department intends to measure whether local authorities are meeting guidelines for the payment of invoices within 10 days. (283587)

In October 2008 the Prime Minister announced that central Government Departments will pay their suppliers as soon as possible and within 10 days. This commitment has also attracted support from the wider public sector. The Government are now working with the Regional Economic Fora (which provide a strategic approach to coordinating economic policies across Government in the regions, are made up of key regional bodies and are all either chaired or co-chaired by regional Ministers) to identify payment best practice across local authorities and the NHS and encourage these areas to commit to the prompt payment code.

Local government has a strong track record of paying suppliers on time, with Best Value Performance Indicator (BVPI) data from 2007-08 showing that 95 per cent. of undisputed invoices were paid on time by local authorities. A Local Government Association survey in January 2009 showed that 32 per cent. of local authorities were making payments in 10 days or less, and a further 20 per cent. within 20 days.

BVPI's have now been replaced by the single national indicator set which are outcome-based measurements of performance. The Government have committed to only performance managing local authorities within these agreed indicators and targets and as the 10-day payment policy for local authorities is not in the national indicator set, we will not be asking local authorities to report their performance. Instead, the focus on businesses in the national indicator set is on business growth and sustainability. In that context we know anecdotally, and through other surveys, that local authorities are targeting those businesses in most in need of prompt payment and are working on a range of wider measures to increase cash flow, simplify and increase the transparency and take up of public procurement opportunities particularly among small and medium-sized enterprises.