The decision to enforce fair payment through the supply chain on all central Government contracts follows Cabinet Office Minister Francis Maude’s announcement last November that he planned to speed up payments by Tier 1 contractors.
The bold move forces several main contractors working for central Government to revisit their payment terms to specialist subcontractors.
In the last 12 months, many specialists have complained bitterly that 60-day or even 90-day payments were fast becoming the norm rather than the Government’s recommended payment period.
Mark Prisk, Minister for Business and Enterprise, said that the decision to implement 30-day payment periods in the public sector had come as a result of listening to the National Specialist Contractors Council’s Fair Payment Campaign.
From now on there will be a common assessment or valuation date for all tiers of the supply chain on central Government contracts and payment must be received down to tier 3 within 30 days of this date.
NSCC President David Jones welcomed the news and said: “Changing custom and practice is never easy – particularly when the practice in question has been around for more than 100 years – but the Fair Payment Campaign shows that, by working together, we can make a difference.
“Government has clearly recognised the importance of fair payment and its decision to make 30 days a requirement gives us a huge opportunity to overhaul the industry’s payment practices once and for all.”
An Information Note has been issued to all central Government departments outlining the 30-day requirement.
In the meantime, the NSCC has set up a confidential feedback service on the Fair Payment Campaign website at www.fairpaymentcampaign.co.uk.
The NSCC will now concentrate efforts on the removal of retentions in 2011.
Clients are increasingly recognising that retentions are an outdated practice and the new NSCC No Retention Policy recommends that specialist contractors do not accept cash retentions.
The best guarantee of quality is a competent and qualified supply chain, and NSCC is encouraging the industry to resist cash retentions in favour of more modern and practical alternatives.