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Commercial Flooring News

Payment Charter Is A Farce!

YOU can tell there’s going to be a general election in nine months, the Government is busy trying to curry favour with everyone. It was the turn of sub-contractors in construction to be courted recently with the launch of the so-called ‘Construction Supply Chain Payment Charter’, highlighting the principle that subbies should be paid within 30 days.
Now that’s something we fully support, every flooring contractor will say! But just a moment: Only eight of the 30 members of the Construction Leadership Council (CLC) signed up to the charter.

That is incredible when it was the CLC which collaborated with the Government in drawing up the charter. So, by implication, two thirds of CLC members don’t support the charter they drafted. That’s a farce!
And there is already negative comment over the charter! Criticism being voiced in the construction press by certain consultants (doubtless being echoed in the boardrooms of main contractors) include that the ‘tier one’ firms will be starved of cash to support all of their operations.
They suggest that major contractors would have to find alternative finance, forcing them to increase their prices to compensate for having less cheap trade credit (i.e. the subbies’ money they hold well beyond 30 days.) They (like subbies) would suffer cashflow problems and the threat of insolvency, causing job losses, etc, not something any government wants to hear from major employers so soon before an election. So will this mean the Payment Charter disappearing as similar failed proposals have in the past?
Main contractors not openly critical of the charter are quietly holding up two fingers to the Government. And that’s not necessarily being rude. Their V sign may be just to indicate the Voluntary nature of the charter: They aren’t obliged to adhere to its principles. The likes of Carillion, for example, hasn’t offered to scrap its 120 day payment plan, which charges subbies a fee to be paid in 30 days!
The minister behind the charter, Vince Cable, sounded saccharinely sympathetic at the launch, almost brimming with tears, talking about the terrible distress and harm late payment causes to small businesses! But being a typical politician, when asked about legislation to enforce the charter, he said that would have to wait until after the election! (i.e. when somebody else will almost certainly be responsible for his brief). What a cop out and a fudge.
Currently, there is there is no timescale for the charter to be implemented and monitored and no sanction against those who do not comply. So the whole thing is no more than an aspiration and not worth the paper it is written on. However, the truth of the matter is that no government can afford to upset the main construction companies with all their enormous financial clout.
Unlike certain politicians, flooring contractors work in the real world and will have to continue on their own fighting to get paid. But their best approach is using the fair payment principles championed by the NSCC.

This article has been reproduced from the Contract Flooring Journal website. You can find them at www.contractflooringjournal.co.uk.