ECA Publishes Survey That Confirms Ongoing Problems with Public Sector Payment

ECA Publishes Survey That Confirms Ongoing Problems with Public Sector Payment

A new survey from the ECA has revealed that many building services contractors are still having serious problems getting paid when engaged on public sector work.

The main problem stems from slow supply chain payment on public sector contracts. A survey of ECA member firms showed that the majority of contractors (62 percent) had less than 40 per cent of their invoices paid by the main or higher contractor within 30 days, which is the widely accepted industry benchmark.

A further 89 per cent of members said that they had seen “no improvement” in payment by main or higher contractors during 2014, despite a range of Government initiatives to improve payment.

“This situation highlights why the new Public Contracts Regulations 2015 – which seek to ensure prompt payment throughout public sector supply chains – are an important part of the solution for contractors. Voluntary initiatives are simply not having the intended effect,” says Paul Reeve, ECA Director of Business Services.

“But as often happens, there is both good and disappointing news for suppliers,” adds Reeve. “On the one hand, the new Regulations enshrine in law the need to pay suppliers in under 30 days – right through the public sector supply chain. This new legislation applies to all public bodies, it sets the industry benchmark for good practice, and it’s potentially a game changer. However, the problem is the word ‘potential’ – since for some reason the Government framed the legislation in a way that does not work well in construction.”

Reeve continues: “Late and withheld payment is a blight on small and growing businesses, and the latest ECA figures on payment are not showing an improvement. The Public Contracts Regulations are a good start, but they fall short of being the solution for construction. We expect plans to eradicate poor payment practice to be above party politics and we look forward to working with the next Government to monitor and improve the payment situation for contractors.”

The Public Contracts Regulations 2015 (SI 102) started to come into force in February 2015. Guidance on the Regulations was issued in March. The Regulations are at: www.legislation.gov.uk/uksi/2015/102/contents/made

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