MPs demand end to late payment and retentions reform

Grant Prior 2 months ago
Share

MPs are calling for maximum 30-day payment terms in construction to become law.

A hard-hitting report from the Business, Energy and Industrial Strategy Committee also demanded an end to early payment schemes which charge suppliers a fee to get their cash.

The report states: “We recommend that the Government moves as soon as possible to require all medium and large companies to adopt a statutory limit of paying within 30 days.

“This statutory limit must exclude the use of early repayment schemes or discounts to bring companies within compliance.”

The committee also demanded an overhaul of the retentions system to include project bank accounts.

It said: “Big companies have a vested interest in holding on to owed money for as long as possible to maximise interest.

“More disturbingly, as the collapse of Carillion demonstrated, there is a concern that many large companies at the top of the supply chain are building this into their business models and if they go bankrupt this money is lost to other creditors.

“This could be addressed by the introduction of independently managed project accounts, to hold retention money.

We recommend that the Government should bring forward proposals as soon as possible to introduce compulsory project accounts so that retention money can be held independently and its release subject to fair and timely oversight.”

Rachel Reeves, Chair of the Business, Energy and Industrial Strategy Committee said: “Many SMEs are placed in a stranglehold by larger companies deliberately paying late and ruthlessly taking advantage of their suppliers, causing these firms financial instability.

“Unless the Government levels the playing field and acts to bring in a tougher regime for poor payment practices then we choke-off the opportunity for SMEs to invest and grow in the future.”

The report has been welcomed by industry payment campaigners,

Neil Walters, national chair of the NFB, added: “Late payers continue to win public work and small businesses are left begging for their hard-earned money.

“Voluntary reform is simply not working and the Government needs to wake up and legislate statutory requirements to make late payment a relic of the past.”

ECA Deputy Director of Business, and SME Business Adviser to the Cabinet Office Rob Driscoll said: “This is a significant milestone.

“Government is now setting the tone for acceptable supply chain payment behaviour, and realising its role as a leading and responsible client in the post-Carillion era.”

To read a full copy of the report click here

Latest news

Laing O’Rourke director killed in car crash on way to work

Tributes to Caroline Blackman who died early on Wednesday morning en route to Hinkley
1 day ago

Kier cutting jobs on Highways England contract

More than 100 workers facing redundancy across Midlands Area 9
1 day ago

Buckingham confirmed for £120m Swansea arena

Six months of pre-construction work to now get underway
21 hours ago

Two North West smart motorway projects delayed

Costain and Galliford Try jobs put back by more than a year
1 day ago

Lendlease wins £8bn Thamesmead development

Morgan Sindall beaten in race for 11,500 home site
1 day ago

Government pledges £80m for Dawlish sea wall project

South Devon railway sea wall will be rebuilt and increased in height by 2.5m
1 day ago

30 jobs lost as Yorkshire precast firm collapses

Rippon-based Ebor Concretes placed in administration
1 day ago

Go-ahead for 200-home Cardiff build-to-rent scheme

Work to start on central Cardiff scheme this summer
2 days ago

Balfour renews £220m London Tube track upkeep

Four-year term will start in April with option to extend by six years
2 days ago

Boost your online presence – join the Enquirer Directory

New site for suppliers and buyers showcases products, services and latest stories
10 months ago

Bouygues paid £21m not to build Garden Bridge

Transport for London documents detail £53.5m wasted on doomed crossing
3 days ago

Government signs off £250m for major housing projects

Deal to release £157m for housing infrastructure in Cumbria and Devon
2 days ago

Beetham Tower owner faces £4m reclad bill

Owner will have to foot remedial facade works bill in wake of Carillion collapse
2 days ago

WYG profit warning sees share price crash 40%

Consultant back in talks with lenders over breaching banking covenants
3 days ago

United Living hires former Wates business director

Michael Holling takes role as northern and Midlands operations director after 24 years at Wates
2 days ago

Union demands death benefits for all construction workers

Unite says lack of employer-paid cover should be as unacceptable as not wearing a hard hat on site
3 days ago

Scaffold collapse on school misses kids by metres

Court hears how untied scaffold fell into Welsh school
3 days ago

Galliford Try construction hit by more Aberdeen bypass losses

Another £26m hit on bypass plunges construction into red in first half
3 days ago

Council terminates Lakehouse school contract

Willmott Dixon takes over site hit by "performance and project delays"
3 days ago

Government infrastructure pipeline needs reality check

Call for Treasury to drop project 'wishlist' for certain Pledged Projects List
3 days ago

Council seeks partner for Birmingham Ladywood Estate

Major regeneration plans at Ladywood and Perry Bar to boost city's housing stock
3 days ago

Willmott Dixon wins £21m Wakefield swimming pool

Work to start next month on Pontefract Park leisure centre
3 days ago

Weston and Tesco plan to turn store site into 1,400 homes

Application set to go in for major mixed-use development in east London
3 days ago

Network Rail unveils major operational shake-up

Devolved operating model moves from eight to 13 routes
4 days ago

Subcontractors wanted across Nottingham

Big name contractors and clients looking to boost supply chains: Register now for Meet the Buyer event
3 days ago

Bidding starts for £18m Helensburgh leisure centre

Argyll and Bute Council hopes to start work on seafront leisure centre and swimming pool this year
4 days ago

Interserve ‘fit for growth’ director exits

Dougie Sutherland merged UK and International construction businesses
4 days ago

Rail minister says HS2 doubts are “complete nonsense”

Government says its commitment to construction of the full route is "undiminished"
4 days ago

Go-ahead for Manchester Airport beauty group hub

Three contractors chase £31m deal for The Hut Group studio
5 days ago

Drink driver careers through roadworks

Jailed driver was three times over the limit when he crashed into a construction vehicle
4 days ago

Contractor services