More than one in three Scottish councils face an 8% interest-rate penalty charge if they continue to ignore the 30-day settlement terms of the Late Payment Act.
From 1 November 1998, under the terms of the Act, small businesses – those with less than 50 employees – can choose whether to charge large enterprises interest on bills that are paid more than 30 days after they fell due. This includes local authorities contracting services from small businesses.
Only 20 of the 32 councils in Scotland paid their invoices within 30 days in 1997/1998, with the remaining 12 lagging behind. The percentage of invoices paid on time varied among councils from 28% to 88%. Edinburgh council paid just over 40% of its invoices within 30 days. With less than 30% paid within the time frame, Midlothian was the poorest performer.
The findings are revealed in an Accounts Commission report on finance and housing, which employs performance indicators to establish how well councils are providing services.
The government is keen for authorities to meet the 30-day deadline and wants councils to adopt the terms of the Late Payment Act. Some invoices will not be paid within the agreed term, however, because they are disputed.
Comparison with previous years is not possible because the indicator was a new addition. Other indicators revealed in the report concern the level of rent arrears and council tax collection.
Robert Black, Accounts Commission controller of audit, said: ‘Councils are aware of the need to improve their council tax and rent collection levels. Councils need to play their part in making improvements, for example by chasing debts promptly, but citizens must play their part as well.
‘Citizens have responsibilities as well as rights.’
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