The National Specialist Contractors’ Council has written an open letter to business secretary Vince Cable, urging him to ensure the Construction Payment Charter is a success.
The Construction Leadership Council launched the new supply chain payment charter in April 2014, when a group of nine clients and contractors on the council agreed to support it.
The charter set 11 fair payment commitments, including to reduce standard payment terms in the construction industry to 30 days by 2018.
It also set out commitments to not withhold cash through the use of retentions and to pay suppliers within terms of 45 days from June 2015 and 60 days with immediate effect.
However, it is understood that no formal charter with signatories has been established, and monitoring and enforcement arrangements have not yet been developed.
In the 1 September letter, the NSCC welcomed mandating 30-day payment terms and the use of project bank accounts as “having the potential to make a difference”.
But, it said, “a lack of monitoring and enforcement has meant that to date neither the public sector nor the supply chain has realised the full benefit of the various commitments”.
The NSCC urged Mr Cable to:
- Publish a statement confirming that all companies working on public sector construction projects will be required to sign up to, or at least comply with, the fair payment commitments set out within the charter and that action will be taken where companies do not meet the commitments.
- Work with the industry through the Construction Leadership Council and its delivery group to develop and publish a process for monitoring and enforcing compliance with the charter by signatories.