‘Pay subbies or else’ 
– new government threat
April 2018

Slow-paying main contractors could find themselves barred from major public sector contracts as part of a new package of government measures to support small businesses. 

Cabinet Office Minister Oliver Dowden announced that contractors may be excluded from major government procurements if they cannot demonstrate ‘fair and effective payment practices with their subcontractors’. The plans also include empowering subcontractors to report poor payment performance by main contractors.

Further requirements mean suppliers will have to advertise subcontracting opportunities via the Contracts Finder website, and to provide the government with data showing how businesses in their supply chain, including small businesses, are benefiting from supplying to central government.

Dowden says the measures are designed to ensure that more businesses - including smaller firms - will be able to supply goods and services to the public sector, while also making public procurement more transparent.

He said: “This government is listening to the business community and is committed to levelling the playing field for smaller suppliers to win work in the public sector.

“We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 - and are doing more than ever to break down barriers for smaller firms.

“Small businesses are the backbone of the UK economy, and play a key role in helping us to build a strong, viable private sector that delivers value for taxpayers and jobs for millions all over the UK.”

Federation of Small Businesses National Chairman Mike Cherry said: “Each year, the UK public sector spends over £200 billion on goods and services from third parties. As such a large and prominent customer in the economy, the government has a pivotal role to play in demonstrating what it is to be a good client.

“It is right then that the government today announces, as part of a new package to boost SME procurement, that it will clamp down on poor payment practice throughout public procurement supply chains. Companies who pay late should not be rewarded with public sector contracts. We need a robust public procurement process that holds larger companies to account for their payment practices.”