Build UK has published information on the payment performance of its Contractor members using data submitted under the Duty to Report on Payment Practices and Performance. The results show that the companies would not be able to comply with the law, under the Public Contracts Regulations 2015.
All UK companies with turnover above £36m and 250 employees or more must now submit information on their payment practices over a six-month period. The Build UK data showed that none of the 24 listed companies meets the Government target of making 30 day payment. The listed contractors took an average of 46 days to pay
Build UK Chief Executive Suzannah Nichol MBE said: “The creation of Build UK offered the industry the opportunity to sit around the same table and work together to tackle the issue of payment, which continues to hold the industry back from realising its true potential. Transparency is essential to changing the industry culture around payment and the Duty to Report has provided a consistent means of comparing performance. This bold first step by Build UK and its members shows that the leaders within the sector are serious about changing the way they do business.”
However, SEC Group has expressed concern that none of the published figures showed payment times of less than 30 days. This means that these companies would not be able to comply with the law (under the Public Contracts Regulations 2015) applicable to payment times on public sector works. The Regulations require payments to be made within 30 days.
Neither are the companies complying with the requirement under the Supply Chain Payment Charter, published by the Construction Leadership Council in tandem with BEIS, to discharge payments within 30 days.
SEC Group’s chief executive, Professor Rudi Klein, said that the figures remain disappointing. He added: “I am concerned that the existing legal requirements and Charters are being ignored. We are urging the Government to put in place project bank accounts on all public sector projects. These will enable SMEs in these companies’ supply chains to be paid within 12-15 days; everybody gets paid from the same ‘pot’ without cash having to travel along the cascading layers of contracting.”
Recently the Public Accounts Committee recommended that (post-Carillion) Government procurers should be protecting firms in the supply chain from payment abuse. The Committee recommended the greater use of project bank accounts and the ring-fencing of the much-abused cash retention system. The Small Business Commissioner has also expressed support for these measures.
Professor Klein said that he is also concerned about insolvency risk posed by the balance sheets of some of the largest companies. Trade credit insurers are now reluctant to provide cover in the event of the insolvency of some of the largest companies.