Industry's cautious welcome for Spring Statement
The Chancellor of the Exchequer, Philip Hammond gave his first Spring Statement on 13th March, and used this to highlight some key issues facing the construction industry. Whilst telling the country that our “best days lie ahead of us”, the chancellor touched on the late payments issue and its effect on the UK’s small businesses. Hammond called for evidence on “how we can eliminate the continuing scourge of late payments”.
The Specialist Engineering Contractors Group (SEC) responded cautiously to this. CEO Rudi Klein commented that over the past 10 years there have been almost 25 different initiatives, reports, codes and charters concerned with improving payment performance in construction but the industry continues to be the worst sector for payment abuse.
He said: “All these initiatives have not brought about the hoped-for improvements in cash flow security. However, the wording of the Chancellor’s statement appears to show a determination to deal with the problem once and for all.”
In related news, BESA and ECA announced that more than 60 trade bodies have joined them in uniting behind the Aldous Bill which proposes that cash retentions owed to the construction supply chain be held in trust. In the construction sector, retentions are a key cause of late payments, with billions owed to sub-contractors at any time.
ECA director of business Paul Reeve commented: “Quite simply, the time for major change to retentions is now. Putting retentions in trust would help to protect the supply chain from future upstream insolvency and it would reduce the amount held in retentions when buyers see that they can no longer use suppliers’ cash to support their own business model.”