Government taking action on late payment and retentions
A report from the department for Business, Energy and Industrial Strategy (BEIS) Select Committee has backed the building engineering sector’s call for tougher action on late payment.
The BEIS committee has urged the government to introduce statutory requirements to pay within 30 days. It also said that the small business commissioner Paul Uppal should have an extended remit to cover construction – and be given powers to fire late payers.
The report also recommends that cash retentions be held in independent bank accounts and that main contractors should be excluded from public sector contracts if they fail to pay their supply chains on time. This is reflected in the recent announcement by the Cabinet Office that it will exclude late payers from government contracts.
Oliver Dowden, Cabinet Office minister, says: “If government contractors are late with supplier payments, they could stop winning public contracts altogether, until they clean up their act. Paying invoices promptly is vital to provide healthy cash flow particularly for smaller businesses who are the backbone of the UK economy.”
BESA and the ECA have been campaigning on the issue of fair payment and gave evidence to the Committee. BESA policy manager Alexi Ozioro says: “Connecting fair payment to procurement is a powerful statement from government, and a very welcome development.”
Rob Driscoll, ECA deputy director of business policy, adds: “These developments represent a significant milestone in the government realising its role as a responsible client in the post-Carillion era.”
BESA and ECA have lead the campaign behind the Aldous Bill which aims to ensure retentions are held in independent bank accounts. Over £10.5 billions of SME working capital is locked in retentions annually with cash flow issues leaving them unable to invest in skills, training and productivity improvements.
(See the exclusive MBStv interview with Paul Uppal at the 2018 BESA National Conference)
Image: BESA's Alexi Ozioro in discussion with the UK's small business commissioner, Paul Uppal