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Wed October 16 2019

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Late-paying construction companies suspended from Prompt Payment Code

30 Apr A host of companies, including Balfour Beatty, Costain, Interserve and Laing O’Rourke, have had their membership of the Prompt Payment Code suspended for consistently shafting their suppliers.

Many of the UK’s biggest construction companies were among the thousands of organisations that signed up to the Prompt Payment Code, administered by the Chartered Institute of Credit Management (CICM) on behalf of the government. They had pledged to pay 95% of all supplier invoices within 60 days.

But a lot of them have either failed... or simply just lied.

Based on the new Payment Practices Reporting data that large businesses must publicly report, CICM is reviewing whether businesses are meeting the standards of the code and actually paying their suppliers promptly. The first phase of these reviews has identified 17 businesses to be removed or suspended, with more removals and suspensions expected in the second phase of review currently underway.

Five companies, including John Sisk & Son, have been thrown out altogether for non-compliance and not providing a plan for how they will meet the terms of the code. The others are BHP Billiton, DHL, GKN Plc and tea maker Twining.

Balfour Beatty, Costain, Engie Services, Interserve Construction, Kellogg Brown & Root, Laing O’Rourke and Persimmon Homes are among 12 businesses that have been suspended from the PPC for not paying their suppliers in line with the code. They have been suspended, rather than expelled at this stage, because they have promised to change.

Other companies in this category of include Atos IT Services, British Sugar UK, Rolls-Royce, SSE and Vodafone.

Businesses suspended from the PPC are invited to produce an action plan setting out how they will achieve compliance with the code within an agreed period. When they have achieved compliance their status as a code signatory will be reinstated. If they do not, then they will be removed.

CICM chief executive Philip King said: “The board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly.

“As part of our work driving culture change to end late payments, we will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant with the Code.”

News of the suspensions builds on a government announcement in November, where failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts.

From 1st September 2019, any supplier bidding for a government contract above £5m per annum will have to answer questions about their payment performance. The expected standard is to pay 95% of invoices in 60 days across all their business. Any supplier who is unable to demonstrate that they have systems in place that are effective and ensure a fair and responsible approach to payment of their supply chain may be excluded from bidding.

Kelly Tolhurst, minister for small business said: “The Prompt Payment Code is a positive force for good and by naming transgressors we are supporting small businesses in the supply chain. We remain committed to supporting small businesses against poor payment practice and are delighted to see that the Prompt Payment Code Compliance Board has acted to expose those whose payment practices fall outside of their obligations to treat suppliers fairly.”

There are plenty of other repeat offenders that have not been sanctioned by the Prompt Payment Code at this stage, as data collated by the Build UK trade association reveals. NG Bailey, Arup, Kier, Murphy and Wates all pay most of the suppliers late and thus can expect to be miss out on government contracts unless they sort themselves out pretty swiftly.

Company Name Percentage of invoices not paid within agreed terms Average time taken to pay invoices (Days)
SSE Contracting 77 25
RLB 74 43
Great Portland Estates 73 46
NG Bailey 66 58
Bachy Soletanche 66 47
Arup 60 32
John Sisk & Son 59 53
Kier 57 52
Murphy Group 56 57
Wates 53 41
Spie 52 78
Balfour Beatty 50 50
Interserve 49 44
Brown & Mason 44 86
Aecom 44 38
Osborne 38 47
Multiplex 38 46
ISG 38 40
BAM Construct 37 41
ISG Fit Out 37 39
Bouygues 30 42
Galliford Try 29 50
Expanded Structures 28 61
Sir Robert McAlpine 28 35
Clugston 28 30
TE Scudder 27 50
William Hare 27 50
Mace 26 34
Van Elle 25 65
Carey Group 25 36
Overbury 25 26
Tamdown 24 62
Imtech 21 81
Vinci 20 33
Morgan Sindall 19 44
VolkerWessels 19 35
McGee Group 17 47
Severfield 17 46
Roger Bullivant 16 55
Keller 16 38
Novus Property Solutions 13 26
Willmott Dixon Interiors 12 30
J. Reddington 11 32
Seddon 9 47
Skanska 9 40
British Land 9 14
Keltbray 8 43
Erith 8 39
Willmott Dixon 8 32
Landsec 8 19
Engie 6 61
Prater 6 55
Heathrow 6 21
Berkeley Homes 5 28
Cementation Skanska 4 42
AJ Morrisroe & Sons 4 36
Canary Wharf Contractors 2 34
Billington 0 48
Byrne Brothers 0 47
Getjar 0 45

Source Build UK: https://builduk.org/priorities/improving-business-performance/duty-to-report/table/

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