Sir Philip Green gives Government a lesson in Credit Management
I wonder how long it will take following the publication yesterday of Sir Philip Green’s conclusions into Government spending practice before the current Coalition jettisons Lord Mandelson’s 10 day payment pledge? Mandelson and former PM Gordon Brown made that pledge to trade suppliers in the midst of the credit crisis to ease thousands of business’ cash flow pressures. I guess they must have figured out that paying trade invoices in 10 days rather than 30 (or let’s take the average time it takes for a British private company to pay a bill of 54 days) would cost the Government, and therefore the taxpayer, more in finance costs. Maybe, with an election coming up in 2010, they thought it would be better to keep more businesses afloat, even if that meant more public borrowing.
However, the new Government has asked tycoon Sir Philip Green to assess central Government spending, and surprise surprise, he finds that Government departments could save billions by paying trade suppliers more slowly.
The new Coalition has made its priorities quite clear since taking office- REDUCE THE DEFICIT. I would therefore wager that steps will be taken soon to ditch the Mandelson pledge in favour of businesses, and replace it with a more robust credit policy that favours the taxpayer. Overly friendly government policy during the last couple of years definitely kept a firm lid on business insolvency numbers during the recession, but will a more hard nosed businesslike stance from Central Government in the future see a different set of stats emerge?