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Hammond vows to tackle 'scourge' of late payments

Chancellor Philip Hammond has vowed to look at cracking down on late payments to small firms. 

In his spring statement today, Mr Hammond said a “call for evidence” will be launched to see how the government can “eliminate the continuing scourge of late payments”.

A consulation by the Department for Business, Energy and Industrial Strategy will be launched “in the coming weeks”, a Treasury spokeswoman later confirmed to Construction News. A separate Cabinet Office consultation looking at how goverment suppliers treat their own supply chain is also due to be launched. 

In the construction industry, the problem of late payment has come under renewed scrutiny in the wake of Carillion’s collapse. During the MP-led inquiry into the failed firm, questions were raised over Carillion’s attitude to small suppliers. Across all industries, the Federation of Small Businesses estimates late payments cause the closure of 50,000 firms a year.

The Federation of Master Builders welcomed the chancellor’s move today. Chief executive Brian Berry said the consultation should “mark a turning point on this issue”.

He added: “We should use this opportunity to bring about a spring clean of payment practices that negatively impact on small business.

“Construction giant Carillion’s collapse at the start of the year brought to light once again the need to eliminate poor payment practises that plague the construction sector particularly.”

The issue of retentions in the construction sector is also moving up the political agenda, as more than 60 trade bodies are backing a bill to outlaw the system.

Elsewhere in today’s statement, Mr Hammond announced:

  • £1.67bn funding for London to build an extra 27,000 affordable homes by the end of 2021/22 
  • £100m for the West Midlands to deliver 215,000 extra homes 
  • £50m to help employers prepare for the roll-out of T-Levels 
  • An extra £80 million funding to support SMEs looking to take on apprentices

Readers' comments (1)

  • Can anyone hear that long grass swaying in the breeze? From the above, we are not promised any useful action, but yet another consultation on what action might look like. So, it’s the usual story of promises, as a direct substitute for solutions. Meanwhile, all the major problems remain and the supply chain is still at risk, or at best finding it hard to invest due to cash uncertainty.

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