Labour leader Jeremy Corbyn has told Construction News he wants invoice payment within 30 days to be enshrined in law.
He said the Prompt Payment Code, which companies can sign up to voluntarily but is not legally binding, should be toughened up into a prompt payment law to protect SMEs.
“I think it has to be enshrined in law that you cannot not pay somebody within 30 days,” Mr Corbyn told CN.
“What Carillion was doing was 120-day payment, which for a small contractor is devastating.”
“Clients, especially in the public sector, should also help to change the payment culture in the construction industry.
“If a company of the size of Carillion got a big railway contract, you could say, ‘Your behaviour has to be [investing in] training, living wage, health and safety – obviously, that’s law anyway – but it also has to be payment of all your subcontractors, with the same conditions on them, within 30 days.”
FMB director of external affairs Sarah McMonagle said legislation supporting 30-day payment terms was something the industry “should be moving towards” to protect SMEs.
Such a move would also encourage smaller firms to work with larger contractors, she added, but needed to be “properly thought through”.
“We wouldn’t want to see large contractors toppling because of legislation that’s brought in that they haven’t had time to adjust to,” Ms McMonagle said.
However, CECA chief executive Alasdair Reisner said it was not yet clear whether additional legislation was the answer, given the existence already of legislation such as the Late Commercial Payments Act.
He said: “I’d need to see the impact assessment and business case that shows this is going to achieve something that all of that previous legislation has not yet achieved.
“But equally, we’ve got to deal with this. It causes such problems across the industry that it’s time to move on, time to find a better way of doing things.”
Mr Corbyn spoke to CN at the launch of painting and decorating contractor K&M McLoughlin’s ‘Skills for Jobs’ drive at its training centre in London yesterday.
The initiative, which has so far worked with more than 600 people, aims to train new construction workers and upskill others.
Mr Corbyn praised K&M McLoughlin’s investment in its training centre, calling it a “credit to the industry”.
“The problems at the moment [in the construction industry] are lack of building capacity and the skills shortage, so I’m very pleased to be here with Kevin McLoughlin who’s done an incredible job locally in promoting construction industry training,” he said.
More workers will help deliver the housing and infrastructure that the country needs, the Labour leader said.
He called on the government to “get a grip” on infrastructure spending, citing delays to Northern Powerhouse Rail and electrifying the Great Western Main Line as examples of a damaging “stop-start” pipeline.
Mr Corbyn added: “Improving our infrastructure is crucial, and that means better training in the industry.”
K&M McLoughlin chief executive Kevin McLoughlin said he invested in the training centre after growing frustrated with inaction across the wider industry.
“No one in our industry argues against more training – but so many don’t do it,” Mr McLoughlin said.
The centre is funded by K&M McLoughlin, which also has two full-time employees running the training programmes.