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The government is still paying small businesses late despite making commitments to settle invoices within ten days, claims a survey from the Federation of Small Businesses (FSB).

Local government is likely to pay one in four invoices late, and central government and government agencies to make one in three payments late, finds the research.

John Wright, national chairman of the Federation of Small Businesses, says: ‘It is shocking that after the government put the Prompt Payment Code in place so many businesses are still being paid late. The public sector needs to take the lead in more than words alone and set an example that paying late isn't acceptable, as this problem persists in the private sector.’

Of the 10,000 respondents surveyed, 30 per cent say EU institutions are likely to make late payments, 29 per cent the NHS and 25 per cent local authorities.

A spokesperson for the Department of Business says the findings are at odds with the government’s own data. 'Around £21 billion of payments were made by central government within ten days in December, with 19 out of 20 invoices now paid within ten days. While local authorities are not covered by the government’s Prompt Payment Code, the majority have committed to paying their accounts promptly as part of the recession plans they have adopted,’ says the spokesperson.