Study shows continuing problems with payments from the public sector
Building-services contractors are still having serious problems getting paid when engaged on public-sector work, according to a study from the Electrical Contractors’ Association. The problem stems from slow supply-chain payment on public-sector contractors.
A survey of ECA member firms showed that 62% has fewer than 40% of invoices paid by the main or higher contractors within 30 days, which is meant to be the industry benchmark.
89% of members said they had seen ‘no improvement’ in payment by main or higher contractors during 2014 — despite a range of Government initiatives to improve payment in construction.
Paul Reeve, ECA’s director of business services, said, ‘This situation highlights why the new Public Contracts Regulations 2015 — which seek to ensure prompt payment throughout public sector supply chains — are an important part of the solution for contractors. Voluntary initiatives were simply not having the intended effect.
‘But as often happens, there is both good and disappointing news for construction suppliers, On the one hand, the new regulations enshrine in law the need to pay suppliers in under 30 days — right through the public-sector supply chain. This applies to all public bodies, it sets the industry benchmark for good practice, and it’s potentially a game changer. However, the problem is the word “potential” since for some reason the Government framed the legislation so that it does not work well for construction projects. We are going to have to work with the new Government to ensure that the regulations deliver the sort of public sector payment regime that construction suppliers need.
‘We expect plans to eradicate poor payment practice to be above party politics and we look forward to working with the new Government to monitor and further improve the payment situation for contractors.’
The Public Contracts Regulations 2015 (SI 102) started to come into force in February 2015. Guidance on the Regulations was issued in March. The Regulations are at the link below.