Councils are denying struggling Scottish construction businesses access to £120 million of cash which is owed to them, according to an industry group.
The Specialist Engineering Contractors (SEC) Group Scotland’s controversial claim was denied by the Convention of Scottish Local Authorities.
The contractors said the main reason that public-sector organisations are withholding cash is to give them more working capital, but this could push many small firms into insolvency.
The SEC said its report, prepared from freedom of information requests, suggested only lip service is being paid to the concept of fair payment.
The contractors are responsible for delivering almost 40% of the £4 billion spent by the public sector in Scotland, and their report contained a number of other indictments.
It claimed that many bodies pay primary contractors within 30 days, but little effort is made to ensure the same treatment is given to sub-contractors.
It also alleged many organisations only commence the 30 days for paying invoices after a lengthy process of internal verification.
Newell McGuiness, managing director of Select, a member of the SEC Group, said the report makes very depressing reading.
“It suggests that while organisations which depend on money from the public purse would appear to be backing moves against late payment, the reality is somewhat different,” he said.
There are calls for the Scottish Government to enforce prompt payment across the bodies it funds, and the SEC Group is also calling for a common start date for the 30-day payment period.
It further wants mandatory project bank accounts, 12 months’ exclusion from public-sector work of organisations which fail to pay their supply chain, and a payment practices ombudsman.
The Scottish Government said it is committed to ensuring that procurement guidelines on pay are adhered to and that companies are paid on time.
A spokesperson added: “We are absolutely committed to ensuring every pound spent on infrastructure investment goes as far as possible to support businesses and jobs, building greater resilience into the broader Scottish economy.”
A Cosla spokesman said: “Councils take their responsibility to pay contractors on time extremely seriously.
“It is wrong to imply that councils are withholding money from contractors as every effort is being made to pay contractors within 30 days.
“Contractors have to be vetted, but local government is committed to supporting the construction community. “To say anything differently is simply unjustified,” he added.