THE CONSTRUCTION INDUSTRY has reacted with fury to the government’s decision to allow companies to pay up to one in four of their suppliers late – without being removed from the signatories list of the Prompt Payment Code.
This despite, Kelly Tolhurst MP, Small Business Minister, delivering a statement to the House of Commons in June 2019, announcing measures to ensure that businesses get paid on time.
This ambition was reiterated in July 2019, when Oliver Dowden MP, Minister for Implementation announced that government suppliers must pay 95 per cent of their invoices within 60 days, or run the risk of being prevented from securing future government contracts.
Yet only a month later, and after some late payers were taken off the Suspended Signatories list only to be subsequently reinstated to the Prompt Payment Code list, the Government’s Small Business Crown Representative, Martin Traynor has again undermined previous commitments, suggesting that companies can pay a quarter of their supply chain late in the previous two reporting periods, without consequence.
Quoted in building.co.uk, Treynor said: “The 75% figure is about reality”.
Richard Beresford, chief executive of the NFB, said: “The reality is that 50,000 businesses close every year because of late payment. Even the department for business admitted that payment times are getting longer. How many more businesses have to go under before we make late payment a thing of the past?”
Nick Sangwin, NFB national chair, said: “This decision is shocking. The Government has ignored pleas from 99% of the construction industry to make the prompt payment code statutory and instead has made it easier to be a late payer.
“With Brexit uncertainty already having a devastating impact on our industry and ministerial silence on reverse charge VAT, this change to late payment shows a complete lack of respect for small business and the construction industry as a whole.”