Reacting to the start of the crackdown, Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “We welcome the new administration taking ownership of the late payment crisis with this crucial step, sending a message that late payments will not be tolerated within Government contracts.
“We have worked very hard with the Cabinet Office to get to this moment. This will prevent another Carillion, where payment terms were lengthened as the company fell into difficulty, hoarded taxpayers’ money and tried to improve its cash flow off the back of its small suppliers.
“This move sends a message to the wider business community that the Government is taking this seriously and those found in breach of the Prompt Payment Code from the 1 September will be excluded from bidding for lucrative contracts.
“As late paying Government suppliers are discovered, they must clean up their act by being placed under special measures for the duration of that contract and then ultimately excluded.
“Measures to open up public procurement will give tax payers and our public services access to the innovation and value small firms bring, as well as helping our economy. This is a challenge, and there is, of course, more work to do, but today’s announcement is an important step.
“We will continue to work with the Government on this and further measures to drive out late payments as outlined in our Fair Pay Fair Play campaign, from the UK economy once and for all."