Debate contribution: Public Sector: Late Payments

Debate contribution by Mr Paul Frew on 10 September 2024.

MLA

Mr Paul Frew

Party at the time

Democratic Unionist Party

Date

10 September 2024

Type

Debate contribution

Business

Private Members' Business

Heading

Public Sector: Late Payments

Assembly identifier

Official Report component 4517774

Read the official Assembly record

Text

I beg to move

Thank you, Mr Deputy Speaker. Local businesses play an integral role in the delivery of front-line public services in Northern Ireland through the provision of goods and services. They ought to be recognised and valued rather than exploited. Late payment has a serious impact on cash flow among businesses in Northern Ireland and disproportionately impacts on small and medium-sized firms. Coupled with high interest rates and the knock-on effect on loans and credit, as well as rising input costs, it is an inescapable fact that the failure to pay small businesses on time and in full puts many to the wall. Previous research found that, compared with larger firms, twice as many small businesses have less than three months of cash reserves and therefore have less of a cushion to absorb disruption to cash flow. We know from research carried out by the Federation of Small Businesses and other organisations that close to a quarter of a million public-sector invoices were not paid within the legal requirement of 30 calendar days in 2021-22. That spans a variety of sectors and professions. We know, for instance, that barristers took industrial action last November because of delays in paying legal aid. That is just one example. When it comes to short-term experience of late payment among small business owners and the self-employed, Northern Ireland is jointly the worst affected region of the United Kingdom.

That is not a defensible or credible position. Increasingly, there is a concern that delays in payment are being utilised as informal policy to ease cash flow problems in Departments and public bodies, given the perilous state of the public finances. Any such approach is totally and utterly unacceptable.

Governments are not businesses. Sometimes I think that they would operate better as businesses, but they are crucifying our small businesses because they will not pay in time. It is not enough for Departments to publish the rate of late payments that are within their remit; we need to know the reasons for that so that future interventions to address the problem are informed, fair and effective. We need to dig deep into the psyche of our Departments. Resistance to addressing that challenge has far-reaching impacts that are well beyond the viability of individual businesses and the health and well-being of the traders that are impacted. A late payment culture has a negative impact on the willingness of local firms to engage in future tendering and procurement processes. That means that ratepayers potentially lose out on benefiting from the best possible bang for their buck and the most effective and efficient approach to a service. If we are serious about investing in public services that are fit for purpose, the Minister of Finance needs to deliver on the expectation of prompt payment. There should be a rapid review of current targets and reporting requirements in order to refresh the Executive's approach and ensure that there is a clear impetus for portraying more effective performance in that area. As part of that process, the DUP believes that the Department of Finance should engage intensively with the FSB to progress the recommendations in its 'Never Better Late' working paper. The UK Government previously revised their prompt payment target for government buyers to 90% of undisputed and valid invoices from small and medium-sized enterprises within five days from the previous 10-day threshold. The Minister should look to replicate that step in Northern Ireland in order to instil confidence in the business community that the Executive are serious about increasing their ambition in that crucial area. I will go as far as saying that there should be legislative change to force Departments into a prompt payment process that is much more rigorous than that which the Departments have hitherto enjoyed. I have working experience as an electrician in the construction industry, which is an industry that has been dogged by late payments. Some of the companies that I worked for no longer exist because companies withheld payments. Cash flow is king. If you are sitting on reserves of only three months but have been awarded a massive contract, you think that you are getting bigger, but if that massive contract does not pay out in time, you are in trouble. For so many companies, the trend and practice is to say, "We will not grow. We will not get bigger. We will not go after those big contracts". That is because the dangers and risks that are associated with late payment for the bigger contracts are just too much. The companies just will not do it. A lot of our companies that could be thriving and striving stay small deliberately. That is the opposite of what the Government are trying to create. Is it not perverse that a Department in this place sponsors an organisation like Invest NI to create jobs while withholding payments to companies? If you say that you support business, you should do it. One small change in the way that we pay companies that provide a service could make all the difference before you even put any money into the budget line of Invest NI. Why are we not doing it? Why are we withholding payments? If we find that Departments are doing that to assuage the pressures on their budgetary requirements, that is really important, and we must get to the bottom of it. The Assembly must investigate it thoroughly to ensure that practices that should not happen do not happen, but I fear that they do. I fear that, somewhere along the line, Departments are withholding payments not because of testing work or whatever but because it is better to have the money sitting in their accounts or coffers for a wee while longer than it going out into the private sector. It is crucifying businesses. We are losing jobs and livelihoods. We are putting companies to the wall, not because of the volatile nature of business or the environment in which those people work, operate and sell but because government is destroying those businesses. I cannot tolerate that or abide that practice, if it is happening. I come from the private sector and the real world. This place can have an impact on the real world. Will that impact be good or negative? Late payment to people who have provided a service is absolutely despicable, yet that is what we are experiencing. Why is that the case? I cannot think of a valid excuse for Departments not paying on time for work that has been completed. It does not make sense to me. My mind does not allow it to compute. Whilst I always say that the Governments should be more like business, I want to see them supporting business in that area. So far, the practices and legacy are shameful.

1,139 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

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Assessed 21 October 2026 at 11:02 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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