30 day payment bill to enforce better payment terms
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The new bill proposed by Labour peer Lord Mendelsohn contains a statutory limit of 30 days for paying bills to ease the burden of large main contractors squeezing subcontractors.
It also outlaws unfair payment practices like subcontractors having to pay fees to get on main contractors’ preferred lists of suppliers and payment of fees to get paid earlier under supply chain finance schemes.
The bill also mandates the use of project bank accounts for public sector works over £500,000 allows small construction firms to refer payment disputes to the Small Business Commissioner rather than go through adjudication.
Lord Mendelsohn said: “Late payment is crippling small businesses while the UK economy is crying out for investment.
“By failing to tackle late payment we are starving our small businesses of the capacity to act. The recent huge escalation in outstanding payments shows that decades of promoting ‘culture change’ has only made things worse.
“This Bill will tackle the issue once and for all with a package of measures that is operable, impactful and measurable.”
Professor Rudi Klein, SEC Group’s CEO, said: “The construction industry is in the midst of an insolvency crisis with 2019 insolvencies likely to overtake by a wide margin the figure of 3,013 insolvencies in 2018.
“The Government’s manifesto for the recent election made clear that it would ‘clamp down on late payment’ but, since Carillion’s collapse, all we have had are numerous consultation documents.”