At a meeting of the Parliament’s Internal Market Committee on Wednesday, members voted to scrap the five per cent compensation rate that would be faced by public bodies if a bill payment to another company was not met within 30 days. However, it was agreed that the statutory late payment interest rate should increase to the reference rate plus at least nine percentage points. Creditors would also be paid €40 damages to cover administrative costs.

 

However, although payment deadlines can be extended to 60 days, the committee agreed that public bodies should only be allowed to do this with special justification, and cannot exceed the 60 day deadline at all. Members also agreed that the standard deadline for health institutions like the NHS should be more flexible at 60 days. In private sector transactions, the extra period should be set out in a contract and could be extended to more than 60 days if this did not affect either business.

 

The proposals were drawn up in an effort to help small and medium sized business through the recession by minimising cash flow problems caused by late payments.

The Convention of Scottish Local Authorities (COSLA) had lobbied against the plans, with its latest EU strategy paper putting this down to a "perceived lack of proportionality, the powers it would give to the EU to define standards in public services and the need for due diligence".

 

A plenary vote on the plans is scheduled for May or June.