Late payment is causing a mental health epidemic among small business owners and staff is a national scandal, according to the Building Engineering Services Association (BESA).
A survey by the Prompt Payment Directory (PPD) shows that a growing number of owners, managers and directors are suffering from panic attacks, anxiety, depression and feelings of extreme anger due to cash flow problems.
Almost half of respondents said problems with cash flow had affected their mental health – a rise of 27% on last year. Some admitted to contemplating suicide because they were struggling to get invoices paid on time and/or in full.
The collapse of Carillion in January, carrying £3bn in debt including £800m in retentions withheld from sub-contractors, has had a major impact, but the survey revealed that late payment practices remain common right across the industry.
62% of owners said they had not been able to pay themselves for lengthy periods because of late payment, 15% had been forced to delay payment to their own staff; and 17% had cut their own pay. Others have had to raid pension pots, sell personal assets and cancel family holidays.
BESA believes the findings should give added impetus to the Aldous Bill, which is due to receive its second reading in the House of Commons on June 15. This seeks to amend current construction legislation to ensure retentions money held back from sub-contractors is protected from abuse in independent, ring-fenced deposit accounts.
“We have had numerous voluntary codes of conduct over the years, but none have changed this pernicious behaviour,” said chief executive David Frise. “This is now a national scandal and the government must legislate because the human toll is mounting.
“The suicide rate in construction-related professions is already well above the national average; and the scourge of late payment is creating unbearable stress for many more small business owners and managers.”
BESA is using Mental Health Awareness Week 2018 (May 14-20) to raise awareness of work-related stress in the building engineering sector. Stress is the cause of depression, suicidal feelings, increased absenteeism and poor productivity and can lead to greater dependence on prescription drugs and alcohol.