WALTHAM FOREST: Council apologises for payment delay threat

8:55am Friday 21st November 2008

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THE council has apologised for sending letters to small businesses threatening to delay paying them for work unless they fill in a questionnaire.

The move, branded as "bullying" by one supplier, meant that businesses have to divulge information about gender, ethnic origin and the size of their business if they want to be paid on time.

This comes just weeks after business secretary Lord Mandelson called on local authorities and health trusts to pay small and medium enterprises (SMEs) within 10 days to help them in the current economic climate.

The letters, entitled Prompt Payment for SMEs and signed by systems and control team leader R Gold, say that the council requires the information in order for it to meet the Government target, although it does not explain why.

One supplier, who did not wish to be named, said: "The attachment is just for SMEs to complete an ethnic monitoring form - which which has nothing to do with payment, apart from, in my opinion, to use these forms to massage figures to the Government."

Conservative group leader Matt Davis slammed the letter as a "triumph for what is politically correct over what is right and proper."

Cllr Davis said: "The council should pay its suppliers promptly and nonsense like this should not come into it.

"The council has spent millions of pounds on SAP software to speed up payment , this sort of thing makes a mockery of that investment."

Cllr Davis added that he is puzzled as to why the council needs the information.

He said: "It is illegal for authorities to be biased for or against any provider based on this sort of information."

David Cowell, Federation of Small Businesses North East London secretary, said: "For the council to use the threat of delayed payment to have a diversity form completed is clearly not good practice.

"My recommendation to anybody concerned about completing such a questionnaire is to pick up the phone and talk to your customer.

"Prompt payment is the most importamnt part of any business if it is set to grow where access to finance is limited, as with the credit crunch."

Mr Cowell, however, praised the council for setting a target that half of its annual spend will be with local businesses by 2011.

A leading councillor described the threatening letter as an "an administrative error."

Cllr Keith Rayner, the authority's cabinet member for finance, said: "This request for information was, in fact, to help the council ensure we are neither excluding nor failing to support any sections of our community.

"However, threatening non-payment is clearly not the way to go about this.

“I would like to apologise unreservedly for this administrative error and assure all our local businesses that this will never happen again.

"I will also make sure a letter is sent to all local businesses confirming this."

Cllr Rayner insists the council is committed to supporting smaller, independent businesses.

He added: "For this reason, we are now arranging to pay our small and medium sized businesses in the borough faster – within ten days instead of their usual terms of trade.”