Construction News

Sun June 13 2021

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MPs call for fair payment action

19 Jul 13 MPs are urging the government not to give public works contracts to firms with a poor history of paying their subcontractors and suppliers on time.

The call for payment history to be part of the bidding process on prequalification questionnaires is one of 11 recommendations from a cross-party inquiry into the issue of late payment to small and medium sized businesses.

The report also says the government should make fair payment a contractual requirement for new government contracts, with Tier 1 contractors paid within 14 days, Tier 2 within 19 days and Tier 3 within 23 days.

Other recommendations include legislation to establish a construction code of conduct, similar to the Grocery Code, with an independent adjudicator for mediation. To ensure that large companies are not intentionally delaying payments to suppliers for their own financial purposes, the contractually agreed payment should be held in an independent trust. Once all the conditions for that contract have been met, the payment can be made to the supplier. A credit ombudsman would arbitrate in disputed cases.

The inquiry was convened and chaired by Oldham East & Saddleworth MP Debbie Abrahams (Labour). The other members of the MPs’ panel were: Mike Crockart, Liberal Dem MP for Edinburgh West; Alex Cunningham Labour MP for Stockton North; Caroline Dineage, Conservative MP for Gosport; Michael Meacher Labour MP for Oldham West & Royton; Toby Perkins Labour MP for Chesterfield; and Robin Walker Conservative MP for Worcester.

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