Rules applying to the late payment of commercial debt applied equally to local authorities and government departments, government chief whip Lord Davies of Oldham told peers.
Cross-bencher Baroness Greengross, former chief executive of Age Concern, said she knew of a charity which was owed hundreds of thousands of pounds by councils. Labour's Lord Harrison, who introduced the debate, said contracts commissioned by Defra two years ago during the outbreak of foot and mouth disease had not been paid, and nor had the statutory interest under the legislation introduced in 1998.
Labour's Lord Borrie, former director general of the Office of Fair Trading, said the 1998 Act was based on a false assumption - that small firms that are owed money would be willing to sue for interest larger firms with which they had an ongoing relationship.
'To expect that was really an impossibility, as the years since have rather proved. Should not the government not think of other methods to ensure that late payment of debts comes to an end'? asked Lord Borrie.
Lord Davies said that was a point, because small firms would not want to alienate large firms. However, there had be improvements since the legislation was passed - such as allowing trade organisation, rather than small firms, to challenge non-payment in court.
Baroness Greengross said she was very concerned about the crippling effect of late payment on many voluntary organisations.
'They face real difficulties because of the late payment of invoices and contract moneys due, specifically from local authorities. One charity of which I know is owed £1.68m out of an annual turnover of £12m. Half that amount relates to the past financial year', she said.
'That is obviously unacceptable, and I seek reassurance from the minister that the late payment legislation will be tightended up to address the problem , which is growing'.
Lord Davies said the baroness had highlighted an important case. The target set for government bodies was also the target for local authorities.
'Of course, each local authority is responsible for its performance, but the government have made it aboslutely clear that we expect public authorities to get as close to 100% timing and performance as possible', Lord Davies commented.
Hansard 14 Oct 2003: Column 755 - 757