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Minister renews warning to contractors to pay on time

24 May 2019 | By Neil Gerrard

Oliver Dowden

A government minister has renewed his warning to construction firms to pay their suppliers on time, ahead of “tough” new rules coming into force on 1 September.

In November last year, the minister for implementation, Oliver Dowden, announced that large companies could be prevented from getting major government contracts if they do not pay 95% of their invoices within 60 days.

A month ago, he also wrote to more than 10,000 businesses to warn them that the new payment rules will come into force on 1 September.

At the RICS annual Construction Conference yesterday, Dowden told leaders from the construction industry: “Small businesses are the backbone of the UK’s economy, so it’s vital that we support them – and one of the key elements of that is making sure they are paid on time.

“For many small businesses, the difference between getting paid in 60 days and 90 days can be vital. That is why I have warned big businesses they must do their bit and I’ve been clear that they could lose out on valuable government contracts if they don’t.”

Alan Muse, RICS global standards director, said: “We have previously recommended linking payment records to procurement decisions, and we are pleased that the new rules coming into force in September endorse this. RICS supports the changes wholeheartedly and believe that this will lead to industry efficiencies for the benefit of all construction stakeholders, as well as supporting the small business across the UK.”

Comments

The Confederation of Construction Specialists is looking forward to seeing if the Government actually excludes late payers from public contracts or employs the well known Government default option of delay.

It would also be extremely helpful if the Government could monitor their Tier 1 contractors as they alter standard forms of subcontract, insist on onerous Terms and Conditions and participate in numerous late payment practices, including: unjustified retention demands, and payment on time if the subcontractor signs up and pays the Tier 1 contractor for the privilege of obtaining their payments on time.

Gerald Kelly
General Manager - Confederation of Construction Specialists

Gerald Kelly, 28 May 2019

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