The Specialist Engineering Contractors’ (SEC) Group has expressed support for the decision of Build UK to publicise the payment performance of its leading member companies, but expressed concern that none of the published figures showed payment times of less than 30 days.
This means that these companies would not be able to comply with the law (under the Public Contracts Regulations 2015) applicable to payment times on public sector works. The regulations require payments to be made within 30 days.
SEC Group’s CEO, Rudi Klein, said that the figures remain disappointing. He added: “I am concerned that the existing legal requirements and charters are being ignored. We are urging the Government to put in place project bank accounts on all public sector projects. These will enable SMEs in these companies’ supply chains to be paid within 12-15 days; everybody gets paid from the same “pot” without cash having to travel along the cascading layers of contracting.”
Recently the Public Accounts Committee recommended that (post-Carillion) Government procurers should be protecting firms in the supply chain from payment abuse. The Committee recommended the greater use of project bank accounts and the ring-fencing of the much-abused cash retention system. The Small Business Commissioner has also expressed support for these measures.
Klein said that he is also concerned about insolvency risk posed by the balance sheets of some of the largest companies. Trade credit insurers are now reluctant to provide cover in the event of the insolvency of some of the largest companies.
“In my view, public sector procurers should have a statutory right to pay firms in the supply chain directly if they can’t obtain credit insurance.”
SEC Group represents the largest sector in UK construction (by value), while Build UK's leading member companies comprise the largest UK construction companies.