An end to payment abuse?
CIC welcomes early day motion on public-sector payment
The Construction Industry Council (CIC), the construction industry representative body of which CIAT is a member, has welcomed MP James Frith’s early day motion on public sector payment.
Mr Frith, MP for Bury North, tabled the motion on 23 January stating that; 'small businesses must not be punished for the misdeeds of a failed large company; the collapse of Carillion highlights the payment abuse suffered by sub-contractors engaged in the delivery of public contracts for a Prime contractor; 30-day payment regulations for public sector contracts are routinely ignored by Prime contractors and left unenforced, which facilitate practices such as Carillion's 126-day payment terms, leaving thousands of SMEs exposed'.
He called on the Government to 'take action to enforce public sector 30-day payment regulations with consequences including the disqualification of those that do not comply from winning public contracts; and calls on the Government to introduce new legislative proposals to place construction retentions into secure and independently held deposit protection schemes and tougher measures to limit borrowing against public contracts.'
CIC Chairman, Professor John Nolan, welcomed the motion. He said 'despite the Construction Supply Chain Payment Charter being in place since 2014 most public sector clients are not enforcing it and it clearly lacks teeth. It is essential that compliance with the Payment Charter is mandatory for all public sector contractors and that this should also extend to their private sector contracts. Failure to comply should result in the contractors’ exclusion from all public sector works. In order to make this work it will be necessary for a central registry to be set up that monitors compliance and facilitates whistleblowing.'
CIAT President Alex Naraian said ‘It is important to examine the issues that have led to SMEs being negatively affected by procedures that should be addressed. CIAT supports Mr Frith’s view that existing legislation needs to be effectively enforced and would add that a review of current practices is also required.’