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Tue July 14 2020

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SEC calls on Welsh health authorities to be better clients

29 Jan Welsh health authorities are doing little or nothing to help curb payment abuse of SMEs in construction supply chains, it has emerged.

The Specialist Engineering Contractors’ (SEC) Group Wales/Cymru, which represents the largest value sector in Welsh construction, conducted a survey of health authorities.

The survey was prompted by the  collapse of Dawnus Construction in March 2019, which left £40m owing to trade contractors across Wales.

Using powers under the Freedom of Information Act, SEC secured responses from all seven health boards, the Velindre NHS Trust and the Welsh Ambulance Service.

The survey revealed that most of them were doing nothing to ensure prompt payments down their construction supply chains despite the fact that Welsh government’s guidelines are that subcontractors and sub-subcontractors should be paid within 19 and 23 calendar days respectively.

Only three respondents (Aneurin Bevan, Cwm Taf Morgannwg and Swansea Bay health boards) took any measures to ensure that subcontractors were paid within 30 days of their payment applications.  Where major capital projects are let under the Designed for Life framework there is some level of compliance with the Value Wales Fair Payment Charter.

Project bank accounts (PBAs) have yet to gain traction with health sector construction procurement in Wales, it seems, despite the protection they are seen to offer to the supply chain. 

SEC said that it expects take-up of PBAs to increase following a pilot PBA that is being undertaken by the Aneurin Bevan University Hospital Board.

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SEC Group Wales national executive officer Cat Griffith-Williams said: “On a positive note, health authorities were paying their first tier of suppliers within 30 days but there was little monitoring to ensure that this was reflected along the supply chain.”

She said: “As from 1st January 2018 the Welsh government mandated the use of PBAs on public sector projects above a £2m threshold.  We would now like to see every health authority in Wales using PBAs.”

SEC also expressed concern that five health authorities were making use of early payment facilities.  “It is unfair that firms should have to pay in order to get paid earlier,” Cat Griffith-Williams added.

SEC Group Wales/Cymru is lobbying the Welsh devolved government to make all public bodies maintain data on payment performance along their supply chains. It also wants health authority purchasers to be made aware about the use of PBAs and given a target date by when all authorities must use PBAs.

Finally SEC is calling for serial late payers to be excluded from bidding on Welsh public sector health works.

The full SEC survey report is available at  secgroup.org.uk/wp-content/uploads/2020/01/Survey-NHS-Wales-Payment-Practices-Summer-2019.pdf

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