Khan apologises to small businesses over late payments

Last year just 74% of payments by the Greater London Authority were made on time, reports Noah Vickers, Local Democracy Reporter

Sadiq Khan at Mayor's Question Time
Sadiq Khan at Mayor’s Question Time

Mayor of London Sadiq Khan has apologised after being called out on late payments made by City Hall to the capital’s small businesses.

Khan admitted it was “simply not good enough” that over a quarter of payments owed to suppliers used by the Greater London Authority (GLA) were being paid later than the target of ten days.

He was challenged on the topic during a Mayor’s Question Time session by Peter Fortune, the Conservative London Assembly member (AM) for Bexley and Bromley.

At the public meeting on Thursday, Peter told Khan that according to City Hall’s own figures, the organisation has failed to hit its target of making 90% of payments on time, every year since he took office as mayor.

The figures provided to Peter stretched back over the last decade, showing that in Boris Johnson’s last three years as mayor, the target was hit each time.

The Tory AM said that the 2021/22 figure of 79% of payments being made on time meant that some £16.5m was delayed from reaching small and medium enterprises (SMEs) that year. In 2022/23, just 74% of payments were made on time – the lowest since the figures provided began.

Peter reminded the mayor of previous occasions when he had raised the issue with him, when Khan had said he recognised how important cash-flow was for small businesses, particularly those struggling after the pandemic. Peter said: “I asked this question in September 2021, I asked it again in June 2022, here we are in 2023.

“You’ve promised to grip this, you’ve promised to take control of it. Why are things getting worse?”

Khan replied: “It’s simply not good enough. Even if you excuse the Covid years, what your stats show is it’s poor before the Covid years and it’s poor after the Covid years, so that’s not a good enough reason.”

The mayor reiterated that “the cashflow coming in is the difference between [small businesses] paying bills and not paying bills”, which was a source of “heartbreak” for him.

He added: “To all those firms who have received payments later than they should have done, I apologise. As soon as Mayor’s Question Time is over, I’m going to look into this personally.”

Khan offered to meet with Peter next week to discuss his findings and proposed actions to improve the situation.

The issue has been previously raised by the Federation of Small Businesses (FSB), who warn that companies are already struggling to make ends meet in the current economic climate.

Laura Timm, the FSB’s London policy chair, said: “Small firms are already being stretched beyond their limits with rising energy bills, rampant inflation, and a mounting cost of living crisis.

“It is therefore disappointing to hear that a quarter of small firms are being paid late by the GLA.

“The GLA and its other anchor institutions should be beacons of best practice in this area.

“Cash flow is already tight, and that is compounded by being kept waiting months for invoices to be paid, which is a serious roadblock to growth and investment.

“Poor payment practice should be a thing of the past and we need to make London a ‘prompt payment zone’”.

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