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31st August 2020
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New survey reveals shocking failure of Government to address payment issues
StreetwiseSubbie.com's latest survey of 216 specialist contractors reveals that the voluntary measures put forward by the Construction Leadership Council, and the promises of help from UK Government to 'help' specialist contractors in the construction industry are still suffering from payment abuse.
Lack of payment is destroying jobs and killing businesses and hampering economic growth.
Here's a snapshot of the results:
* 94.9% of specialist contractors being paid outside of the 30 day limit on publicly funded projects, despite government's '30 day payment promise'.
* Some 4.7% had to wait longer than 90 days on taxpayer funded projects.
* On private sector projects, less than 9% of specialist contractors were paid within 30 days.
* 84% of specialist contractors found other Government solutions had 'no teeth', including the Construction Act, Prompt Payment Code, and Mystery Shopper.
* The majority of the survey respondents were in outrage, about reverse factoring schemes being offered as a 'solution' stating that they were offered 120 day payment terms as 'early'.
* According to the Office of National Statistics' figures; in the 12 months ending Q3 2013, the highest number of liquidations was in the construction sector at 2,819. Between Q3 2010 and Q2 2012 there were an additional 5,000 construction insolvencies (figures from PwC).
Barry Ashmore, managing director of StreetwiseSubbie.com and ex-specialist contractor, has written a paper based on the findings of the survey, which looks at the deep rooted issues behind payment abuse that are killing off specialist contracting businesses.
In the report, he talks about payment terms exceeding 30 days and the uncertainty caused by bad payment practices can mean the difference between survival and failure, with labour and material costs eating away at their cashflow while the contractors hold onto the money they so desperately need.
"If you have ever run a specialist contracting business, you would know that delaying payment to your labour force or suppliers isn't an option. The lads walk, and the suppliers put you on stop!" says Barry. "The failure of these small sub-contracting businesses does not reflect well on the growth of the economy or the rebuilding of a strong construction industry.
"While the Government plugs its 'Small Business: GREAT Ambition' initiative and pumps money into infrastructure to improve the economy, this report shows the outlook for small businesses in the UK construction industry is as bleak as ever.
"If the Government does not legislate quickly instead of producing meaningless reports and putting forward toothless solutions, then not only is the construction industry under threat of collapse but so is the economic growth we so desperately need.
"Small businesses are the foundation of the industry and the economy; we cannot carry on allowing them to fail."
Streetwisesubbie.com undertook its first survey in 2012 in response to the disturbing number of specialist contracting companies that were being forced into insolvency, as a result of the deteriorating payment situation and the high incidence of contractual abuse in the construction industry.
The surveys have been completed by substantial businesses across a whole range of specialisations within the industry.
The current survey has been undertaken by 216 Specialist Contracting businesses, and 78% of those who responded are firms with a turnover of £1million-plus and some 14% are in the £5million-plus bracket.
10th October 2014