Late Payments
Debate between Lord Shipley and Viscount Younger of Leckie
Viscount Younger of Leckie
To answer the second question, it is the case—although I do not have the figures here—that if a company on a public contract does not pay on time, it will be removed from further contracts; that is already there. He asked me to point out names; I do not have the full list here. As for naming and shaming, he will know that Holland & Barrett and G4S are in the public domain as having been thoroughly reprimanded for their poor payment practices. I also know that some companies, before being named, have realised that they were on the brink of going the wrong side of the line, as it were, and have voluntarily taken action. We believe that this is working and that the voluntary approach is right.
Lord Shipley (LD)
My Lords, what thought have the Government given to introducing ring-fenced bank accounts for major government projects delivered by the private sector, so that subcontractors are guaranteed prompt payment and do not have to worry about the main contractor’s financial health? I understand that the policy is supported by the Federation of Small Businesses and was recently adopted by the Welsh Government. As an example of the problem, before its collapse Carillion’s average payment time was 43 days—with some firms waiting up to 120 days for payment—despite it signing the Prompt Payment Code and being subject to the Public Contracts Regulations.
Viscount Younger of Leckie
This takes us into the territory of the sometimes complex ways of financing supply chains or projects. On project bank accounts—this is perhaps more focused on construction, but I hopes it helps answer the noble Lord’s question—the current policy is to use these types of accounts unless there are compelling reasons not to do so.