Build UK has published the payment performance of its tier 1 contractor members showing average times taken to pay sub-contractors and how often payments are made beyond terms.
The data shows that all the main contractor companies listed exceed the government’s recommended 30 day payment terms. All the tier 1 construction businesses have also not paid invoices within their agreed timeframe – with some companies paying late on more than 70% of their contracts.
The late payment figures presented by Build UK illustrate the entrenched and long-standing problems in addressing fair payment practices in construction. Although Build UK is formed from both main and sub-contractor members and says it represents both, when the organisation was created it attracted criticism for trying to unite two sectors that essentially have opposing interests – with the more powerful and wealthy tier 1 sector holding all the cards.
Build UK Chief Executive Suzannah Nichol comments: “The creation of Build UK offered the industry the opportunity to sit around the same table and work together to tackle the issue of payment, which continues to hold the industry back from realising its true potential
“This bold first step by Build UK and its members shows that the leaders within the sector are serious about changing the way they do business.”
The Government has set out the need for improved payment practices in the Construction Sector Deal published earlier this month. The minister responsible for implementing the Deal, Oliver Dowden said: “All public sector organisations are required to pay undisputed invoices in 30 days and ensure this payment term is passed down the supply chain. Build UK is leading the industry by publishing its members’ payment performance.”
The National Federation of Builders (NFB) says “The payment performance data published by Build UK show not only their failure to follow best practice and fulfil a legal requirement to pay clients within 30 days, but utter disregard for small and medium-sized businesses and regional contractors.
“After the fall of Carillion and recent reports highlighting that almost nine out of ten councils are breaking prompt payment rules, the NFB is astonished to see a Government minister praising Build UK for barely fulfilling its legal obligations.
Neil Walters, national chair of the NFB, added: “Fair practice is essential to changing the industry culture around payment, not transparency. Transparency is a legal requirement, not a bold step. Procurement regulations already require 30-day payment terms down the supply chain, but the first thing tier one contractors do is change the contract terms to suit their interests and all but force SMEs to sign the amended terms to get paid.
“Seeing Build UK portray tier one contractors like industry pioneers is the ultimate insult. Build UK members, who make up less than 1% of the construction industry, are failing the 99%.”
The published data is for 24 out of 27 Build UK Contractor members obliged to report their payment practices under the Duty to Report every six months. The full set of results will be published in October.
|Company Name||Percentage (%) of Invoices not paid within agreed terms||Average Time Taken to Pay Invoices (Days)||Date of Duty to Report Submission|
|Sir Robert McAlpine||70||49||04/06/2018|
|John Sisk & Son||64||52||24/07/2018|
|Canary Wharf Contractors||8||34||24/07/2018|