By Daniel Hunter
The Federation of Small Businesses (FSB) has praised Salford Council after the authority made a significant change to its procurement policy.
Last month, FSB research showed just one council in the region (Bolton) was using contractual agreements to ensure sub-contractors used by local authority suppliers to fulfil a job, are paid within 30 days. This is how fast all councils are supposed to pay suppliers, but many of these then fail to pay their own sub-contractors in such a timely fashion.
Following publication of their research, the Federation wrote to all councils in the region asking they consider implementing such a practice to stop this happening. Salford Council’s City Director Jim Taylor, has since written to the FSB’s Manchester & North Cheshire Chairman, Richard Gregg, saying Salford had reviewed its policy, and was now making those demands on suppliers.
He said: “Salford City Council places a strong emphasis on delivering social and economic gains wherever possible from its procurement activity. One of the aspects that we have recently considered is the payment terms for sub-contractors.
“We have now amended the relevant clause in Salford City Council’s standard terms and conditions of contract to ensure that our suppliers are contractually obliged to making payments to sub-contractors within the 30 day timeframe set out by the Government.
“This requirement was already included in some of the terms and conditions for construction services, but we have now ensured that this will be taken forward in all future procurement activity, whatever the category of activity.”
Richard Gregg, the FSB’s Regional Chairman in the Manchester & North Cheshire region, said: “This is great news for those small businesses who at some point in the supply chain, provide goods or services for one of Salford Council’s suppliers.
“Prompt payment is a blessing for small firms, many of who struggle with cash flow, so anything that can help remedy that is very welcome. We strongly urge other local councils to follow suit. All public bodies can and should be making this gesture to help small firms.”
Trafford Council have also recently stated that they too are looking at changing their policy. Leader of the Council, Cllr Sean Anstee, told the FSB they were looking to introduce ‘contract clauses’ for their suppliers, but said it would require ‘careful consideration’ before being implemented with regards to how the council monitored performance, and also of the consequences for those suppliers who went on to breach the contract.
Gregg added: “It’s great that Trafford are looking at this. It’s right that any council supplier who is paid in 30 days by the authority should pass on that benefit to their sub-contractors. It’s only fair, and we hope Trafford can make this change ASAP.”
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