Minister Silent On Fair Pay Support
BUSINESS secretary Vince Cable has reportedly not replied to a letter sent over three months ago by the National Specialist Contractors’ Council asking for his support for fair payment on public sector projects.
The letter was sent to Mr Cable by the NSCC on September 1 on behalf of its 30 trade association members, including the Contract Flooring Association.
Written by NSCC chief executive Suzannah Nichol, it requested from Mr Cable a public declaration that companies working on public sector projects would have to comply with commitments in the Construction Supply Chain Payment Charter, as published by the joint industry and government Construction Leadership Council (CLC), which is co-chaired by Mr Cable, in April.
NSCC also sought Mr Cable’s support to work with the CLC to develop a process for monitoring and enforcing compliance with the charter, to reduce standard payment terms in the construction industry to 30 days by 2018.
Suzannah Nichol reportedly told Construction News: ‘Mr Cable should have no problem standing up and saying every central government project will only employ contractors who abide by the principles of the charter.
‘Why is he employing anybody that starves the supply chain of cash?
‘It is the supply chain that employs apprentices and keeps our local economies moving. If you’re not paying those businesses and they’re not spending money locally, then actually we’re holding back the growth that we all need.’
A new survey of Federation of Master Builders and NSCC members (See page 18) reveals that 92% agreed contractual payment terms with their clients of 45 days or less, which the CLC’s payment charter requires from June 2015. However, only 56% of the 719 respondents received payments within those contractual terms.
Ms Nichol added that the results proved that 45-day contractual payment terms were ‘within the reach of almost everybody’.
She explained that to address the gap between contractual terms and the ‘reality’ of payment, tier two contractors needed to tighten up their own accounting processes and ‘put more concerted effort into chasing money’ when it is not paid on the due date.
When working for the public sector, only 56% of NSCC and FMB members received payment within 30 days, compared with 32% across all projects.
Ms Nichol declined to ‘name and shame’ poor payers, but said that private clients, including domestic clients, ‘came very high up on best payers’ while a number of main contractors ‘were consistently put down’ as poor payers.
To improve payment practices within the industry, Ms Nichol said the priority was to ‘embed’ the payment charter with agreed key performance indicators and client and contractor support.
A Department for Business, Innovation and Skills spokesperson reportedly said: ‘All government construction contracts require sub-contractors, up to tier three, to be paid within 30 days.
‘The monitoring and reporting framework to support the construction payment charter is currently being developed.
‘Once the processes are in place for reporting progress against the charter, BIS will work with the Cabinet Office to determine whether procurement policy might work further with the charter.’
This article has been reproduced from the Contract Flooring Journal. You can find them at www.contractflooringjournal.co.uk.