Government failing to pay businesses, say Labour

The Government was accused by Labour tonight of failing to "promptly" pay £3.7 billion to businesses.

Shadow business secretary John Denham said struggling firms were being forced to chase the coalition for payment.

Official figures show that since May last year, £3.7 billion was not paid to businesses within the five day prompt payment target and £370 million was still not paid after 30 days.

The worst department was Work and Pensions, paying £1.7 billion worth of invoices after the five day target, according to parliamentary written answers obtained by Labour.

Mr Denham said: "It is vital that we support business as the driver for growth in our country. But at a time when businesses are struggling with cash flow, the last thing they need is to chase the Government just to get paid for their work.

"They should be spending time growing their business and creating jobs.

"The Tory-led Government needs to pay their bills promptly and make sure that businesses at all levels in the supply chain are able to invest in their future, helping to get the deficit down through growth and jobs."

Many Government contractors sub-contract to small and medium sized enterprises, but are unable to pay them until they receive payment from the public sector.

Labour stressed that at a time when businesses were struggling with cash flow, prompt payment could mean the "difference between a firm growing and creating jobs or going under".

Earlier this month, a survey by the Federation of Small Businesses found that almost three out of four small firms were paid late in the past year by both the private and public sectors.