Trade bodies have praised government plans to exclude contractors with poor payment records from bidding on public contracts but called for further action to be taken.
Cabinet Office minister Oliver Dowden yesterday announced proposals to exclude firms that cannot demonstrate fair payment practices with their subcontractors from government deals.
Responding to the plans, Building Engineering and Services Association policy manager Alexi Ozioro said: “There are a few ways to report poor payment performance already, but if this one has teeth and direct consequences backed by government, it could see a huge culture change that will benefit thousands of SMEs.
“It is very encouraging to see, for perhaps the first time, government make the connection between fair payment and winning public contracts.
“As the most important customer to the industry, government contracts need to encourage best payment practice, and this is a good first step.
“If the government can enforce disqualification from public contracts for poor payment this will go a long way to improving the industry and delivering the built environment that the country needs.”
The Specialist Engineering Contractors’ Group took the opportunity to call on the government to introduce project bank accounts for all public sector projects, while throwing its support behind the retentions bill MP Peter Aldous has introduced.
Its chief executive Rudi Klein also suggested a statutory regulator be brought in to police the behaviour of large contractors.
“The Carillion debacle has revealed the appalling level of abuse heaped on construction supply chains,” he said.
“We should also be considering the introduction of a statutory regulator to challenge the behaviour of large firms and, if necessary, fine them in the worst cases of abuse.”
The Electrical Contractors’ Association director of business Paul Reeve called for the government to act swiftly.
“We are looking for early action, not just consultation, to help deal with what’s widely recognised as a clear and present problem in our industry,” he said.
“Early action will also underpin progress with the industrial strategy and the construction sector deal.”
CBI sector development director George McFarlane meanwhile said the government had the chance to lead the way.
“For these proposals to tackle the often complex causes of late payment in construction, close collaboration will be required between government and businesses of all sizes,” he said.
“Greater transparency on payment performance, and the appointment of small business champions, should create new focal points for this shared effort.
“Businesses will welcome steps to improve payment practices in public procurement supply chains, and are eager to work with the government to ensure these proposals have a lasting impact.
“With around 200,000 organisations involved in delivering public contracts, effective procurement and vibrant supply chains can be powerful levers to help smaller firms succeed.
“As the largest client in the construction sector, government can lead by example in creating that success.”
Build UK chief executive Suzannah Nichol MBE said the trade body had met with the cabinet office and would be working with them going forward.
“Build UK has been very clear that in order to improve payment practices, we also need the support of Government both as a client and a regulator”, she said.
“We have met with Oliver Dowden and will be working with the Cabinet Office to implement its good intentions through robust and effective procurement practices that have the potential to change payment practices for ever.”