Businesses: Contracts and Payments

Lord Butler of Brockwell Excerpts

Wednesday 3rd November 2010 Lords Chamber

[Baroness Wilcox]

Yes, my Lords, I well remember that Question being asked by the noble Lord and the supplementary question. Central government is paying within five days. I also know that some of the people it is paying within five days are paying their people within 20 or 30 days of sight of invoice. We shall certainly look at all those contracts that have been set up as soon as they come to their due date. You can be absolutely certain that I, as a Business Minister, who has been on the receiving end of that, will ensure that the terms are right all the way through the system.

[Lord Butler of Brockwell]

My Lords, will the Minister say how the Government square their support for the prompt payments code with Sir Philip Green’s recommendation that the Government should pay their bills more slowly?

[Baroness Wilcox]

My Lords, I am a bit of an expert on Sir Philip Green’s report because I have read it now. His report says nothing specific about government payment terms. In interviews, he says that the norm in most departments is to pay suppliers in five days, compared with the standard 30-day-payment period for most private sector transactions and the 45 days demanded by some bigger companies like his own. If the Government demanded a minimum of 30 days of credit from suppliers, they would save hundreds of millions of pounds in financing costs. That is what he has said in conversation but his report actually says nothing at all about it.