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Hats off to Network Rail; now others must follow

Jack Simpson

It’s not often that Network Rail is singled out for praise.

High-profile timetabling issues over recent weeks have put the rail client in the crosshairs of the mainstream press.

Today, however, Network Rail deserves some credit.

In a post-Carillion world, many clients give lip service to the need for payment and retention reform, but few have yet done anything to tackle it.

Step forward Network Rail.

From the beginning of Control Period 6 next year, all its tier one contractors will be contractually obligated to pay their suppliers within 28 days.

These firms will also be barred from using retentions.

Billions are lost in the construction supply chain each year through late payment and the holding of retentions, so it is no surprise Network Rail’s announcement has received a warm welcome.

However, the lack of clarity around how contractors will be punished for non-compliance is a slight concern.

When asked what the consequences would be, commercial projects director for Network Rail’s Infrastructure Projects division Stephen Blakey said “no specific penalties had been agreed” and that there was “no need to do anything punitive”.

History has shown us that, without repercussions, there will be contractors who bend or circumvent rules set by clients.

While Network Rail’s fair payment charter has yielded some success up until now, compliance has not been universal among the contractors signed up to it.

In annual reviews, Network Rail found that only 60-70 per cent of firms consistently adhered to the requirements.

Without the threat of being reprimanded or losing out on work, there is a danger that the changes announced this week could be toothless.

However, the buy-in from Network Rail’s main suppliers is encouraging, with leaders from Colas Rail and VolkerRail already coming out in support of the changes.

There is a growing acceptance within Network Rail and its suppliers that these reforms are “the right thing to do”, as Mr Blakey told me, and these new terms and conditions will translate this attitude into action.

It is crucial that other big clients now follow suit – not least the biggest client of them all: the government.

Whitehall has made promising noises about payment reform, having announced in April plans to ban poor payers from public contracts

These threats need to be followed by action, with requirements written into tender guidelines and documents.

It is a regularly coined phrase that clients set the rules, and contractors play the game.

As more and more high-profile clients set stronger rules on payment, contractors will have to fall in line.

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