Construction News

Fri February 26 2021

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Late payment continues to blight the construction industry

10 Oct 14 A survey of specialist contractors indicates that the government’s prompt payment initiative has completely failed in the construction industry.

Campaign group Streetwise Subbie surveyed 216 specialist contractors and found that 95% were being paid in excess of 30 days on publically funded projects, despite government’s ’30 day payment promise’.

On private sector projects, fewer than 9% are getting paid within 30 days.

Of the firms surveyed, 78% have a turnover of more than £1m and 14% turn over more than £5m.

The survey also found that 84% of respondents thought that the remedies available to get paid the correct amount and on time, such as the Construction Act, adjudication or litigation are unsuitable, do not work, and need changing.

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In a report on the survey’s findings, Streetwise Subbie founder Barry Ashmore says: “To a small business, payment terms exceeding 30 days can mean the difference between survival and failure, with labour and material costs eating away at their cashflow while the [main] contractors hold onto the money they so desperately need. And if you have ever run a specialist contracting business, you would know that delaying payment to your labour force or suppliers isn’t an option. The lads walk, and the suppliers put you on stop!”

He continues: “One of the saddest calls I’ve had was from a lady who had run up personal debts of £100,000 trying to keep her husband’s shop-fitting business going. The contractor had piled more and more variations on them and demanded that they did the work, but then didn’t pay them, leaving them no alternative but to fold the company.

“How many families have been devastated by similar disgraceful payment practices?”

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