Euro MPs vote to protect front-line NHS spending

NHS European office director Elisabetta Zanon expressed delight that the European Parliament had listened to the concerns of NHS organisations and softened proposals to penalise public bodies for late payment of bills.

The European Parliament has voted to significantly soften hard-line proposals that would have required NHS organisations and other public authorities to pay out up to £600m a year in fines for late payments.

Under the original EU proposals public sector bodies were the target of highly punitive new penalties if they did not pay bills to private companies within 30 days. Intense lobbying from the NHS European Office and the Local Government Association has forced EU decision-makers to re-think these proposals.

The most contentious issue was a flat-rate compensatory fee of 5 per cent of the invoice amount, on top of interest and recovery costs, and irrespective of the amount due. The possibility to charge interest on late payments and recovery costs already exists in UK law, but this 5 per cent flat rate compensation in addition would have led to a fine of over £6,000 on a £100,000 bill unpaid for 31 days.

The European Parliament’s vote on the proposals, at Committee stage on Tuesday 28 April, reflects the NHS’ concerns and proposed changes to the EU text. In particular, Euro MPs agreed to abolish the 5 per cent penalty fee for public authorities, which was estimated could cost the public sector in the UK up to £600million in fines.

Elisabetta Zanon, director of the NHS European Office, said: “NHS organisations spend hundreds of millions of pounds with small and medium sized businesses every year and understand the responsibility they have to pay promptly for the goods and services they receive. These proposals as they stood, however, threatened to blow a black hole in every trust’s finances.”

“There is already a system of penalties in place for late payments and we saw the plans to extend and increase it in this way as very unhelpful, placing additional and unnecessary costs on the health service at a time when budgets are already under pressure.”

“We are delighted that Euro MPs listened to our concerns, however we are conscious that there is still a way to go in the EU negotiations on these proposals. We will be maintaining the pressure to ensure that the NHS, along with other public authorities, is treated fairly.”

Cllr David Parsons, Chairman of the Local Government Association's Improvement Board, said: “This is a victory for common sense, and a positive step forward which will lift the threat of unnecessary bureaucracy from descending on the job of getting paid.

“Small and medium sized businesses find late payments a problem irrespective of whether they are from the public or private sector. Equal treatment of public and private partners in the penalties regime is essential.

“The previously proposed five per cent penalty was a potential profiteers' charter for companies to extract money from the public sector by submitting badly drawn up or inaccurate invoices. Today's decision is good for business and the public sector.”