Government bids to make builders pay bills on time

8 September 2004
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09 September 2004 | Sam Fortescue

The government has set up a task force to investigate late payment problems in the construction sector.

The Fair Payment Task Force - aimed at tackling widespread payment retention down the supply chain - is chaired by Arnold Butler, the Office of Government Commerce's director of property and construction best practice.

A spokesman for the OGC said the group would consider how best practice could be better adopted throughout the supply chain on public-sector projects.

Officials from local and central government have had their first meeting with members of industry bodies and major contractors and will propose measures in 2005 after reporting to Paul Boateng, chief secretary to the Treasury, in the spring.

It comes as a response to years of lobbying by subcontractors' groups for quicker payment in public-sector building projects.

Contractors say the government has improved as a payer, but firms lower down the supply chain continue to withhold payment from suppliers.

The Specialist Engineering Contractors' Group claims the delayed payments amount to £3.25 billion each year.

Rudi Klein, chief executive of the SECG, said this was at best unfair, and at worst fraudulent.

"The burden comes down to smaller firms at the bottom of the supply chain. They have to finance it somehow, so they stop training, innovation and other vital investment."

He welcomed the task force on condition it produced concrete proposals, and said he hoped the government could force change by refusing to deal with contractors that did not implement fair payment codes.

Marion Rich, legal director at the British Constructional Steelwork Association, suggested that one solution would be to enforce partnering arrangements between contractors all the way down the supply chain.

A spokesman for credit rating agency Experian welcomed the task force. According to its latest survey, the average wait for payment was more than 58 days, a fall of 1.5 days since November 2003.

SMsep2004

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