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Laing O'Rourke and Carillion sign prompt payment code

Carillion, Kier and Laing O’Rourke are among the new contractors to sign up to the government’s Prompt Payment Code after construction minister Michael Fallon wrote to the UK’s biggest firms to urge them to sign up to the scheme.

The number of FTSE 350 companies pledging to pay small firms promptly has tripled, the Department of Business revealed today, after Mr Fallon wrote to big businesses in November.

Interserve and Wolseley UK have also signed up to the scheme since November and a total of 94 FTSE 350 companies have signed up, taking the total to 126, meaning three quarters of FTSE 100 companies are now signatories.

Mr Fallon said: “Late payment is a real issue for businesses across the country. It is not fair and poor cash flow can prevent small firms growing and even push them into insolvency. We need to improve the payment culture and I welcome the response of big businesses in signing up to the common sense principles in the Prompt Payment Code.

“Signing up demonstrates a serious pledge to pay promptly. Reports of any companies found to be falsely committed to the value of fairness in the Code will be taken very seriously.”

Click here for a complete list of the construction-related firms who have signed up to the code.

Federation of Small Businesses national chairman John Walker said: “FSB research shows that around three quarters of members have experienced late payment with almost one in 10 (11 per cent) waiting for more than £35,000. Big business has financial buffers that a smaller firm doesn’t have and so they must be encouraged to pay on time.

“It is great news that so many of the biggest companies have signed up to the Prompt Payment Code and we would urge the others to follow suit. We would also encourage government to look at its procurement contracts and its Tier 1 suppliers to ensure that they are passing the favourable payment terms they are receiving on through the entire supply chain.”

The introduction of the European Union Late Payment Directive this month will stipulate that business-to-business payments cannot exceed 60 days unless otherwise agreed and provided it is not unfair to the creditor. Public sector payment terms cannot exceed 30 days on receipt of invoice.

Main contractors are contractually required to pay their suppliers working on central government contracts within 30 days. The Department for Business, Innovation and Skills says it has a current success rate of over 90 per cent.

The Cabinet Office also operates a ‘mystery shopper’ system, which gives sub-contractors an opportunity to contact central government and complain if it feels aggrieved by the payment practices of a primary contractor.

Readers' comments (3)

  • the link doesnt work :(

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  • Tom Fitzpatrick

    Sorry, that should be fixed now. Select construction from the drop-down menu to make life easier!

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  • StreetwiseSubbie

    Whilst it is a useful step along a very rocky road, getting firms to sign up to the prompt payment code is not enough.

    The heart is currently being ripped out of the UK Construction industry by corporate greed, and the government seems powerless to stop it...

    So what's to be done about it?

    The industry has to find an answer, and readers of this publication from all sides need to action this now, before it's too late!

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