Last month, the minister for implementation Oliver Dowden announced that if construction firms fail to pay suppliers promptly in future, they could be banned from winning government contracts.
The announcement reflects what the ECA and its partners have been repeatedly asking government to do in recent years, and it confirms what’s needed to modify poor payment behaviours in the supply chain.
The minister’s latest announcement says that, from autumn 2019, there will be a move to ensure government only does business with companies who pay their suppliers on time, in order to “promote a healthy and diverse marketplace of companies who provide public services”. While the intention is very welcome in principle, three major hurdles must be overcome before this turns into practical help for the construction supply chain.
Firstly, we’ll need to see the move from promise to reality, and plenty could happen to buffet this initiative between now and next autumn.
Secondly, the government’s statements in this area have too many maybes. Take, for example, this from Mr Dowden: “If government contractors are late with supplier payments, they could stop winning public contracts altogether – until they clean up their act.” The ‘could’ leaves the prospect of keeping the door open to slow payers; we need a ‘will’, which is more likely to deliver.
And all this brings us to the third hurdle: actual implementation. Even if there is a clear government edict to exclude poor payers, we will need to see it applied, and applied universally, across government procurement.
“With these new initiatives, government is certainly showing that it’s listening”
Alongside its newly proposed crackdown on poor payers, the government announced it will be updating its public sector suppliers’ complaints service. Formerly, and rather confusingly, called the Mystery Shopper service, a new-look Public Procurement Review Service will give suppliers of all sizes the opportunity to comment and complain – freely and anonymously – about any public procurements they are involved in, or about the conduct of contracting authorities.
With these new initiatives, government is certainly showing that it’s listening. With the potential reputational impact of mandatory payment performance reporting, broad realisation that the retentions status quo is untenable, and with the impending one-year anniversary of the Carillion debacle, payment issues seem to be moving in the right direction – as they must, for the sake of the industry.
I’ll leave the last word to Mr Dowden, who, in announcing next autumn’s crackdown, pointed out that “paying invoices promptly is vital to healthy cashflow, particularly for SMEs – who are the backbone of the UK economy – to help them survive and thrive”.
We couldn’t agree more, and it’s high time for decisive and meaningful action to cast aside poor payers.
Paul Reeve is director of business at the ECA