Industry body has welcomed brief pledge in Spring Statement to support apprenticeships and consult on how best to end late payments in sectors such as construction
BESA has said a recent pledge from chancellor Phillip Hammond to support apprenticeships and tackle the issue of late payments is “timely” as it seeks to pass a new bill into law that reforms how cash retentions are managed.
The chancellor used his Spring Statement last week to issue a call for evidence to crack down on the “scourge of late payment”. He also committed £80m in order to help small firms take on apprentices, while also extending training tax relief for self-employed individuals.
BESA President Tim Hopkinson said that the commitments to payment reform reflected how the issue been pushed up the political agenda following the collapse of Carillion in January. A new bill was also introduced to parliament earlier in the same month that would make use of retention deposit schemes mandatory if passed into law.
MP Peter Aldous delivered the first reading of the Construction (Retention Deposit Schemes) Bill as a means to try protect income from upstream insolvencies by holding money in accredited deposit schemes.
Over 65 trade bodies have now lent their support to the proposed legislation, according to BESA.
The Federation of Small Businesses, which is among the organisations to back the bill, estimates that 50,000 firms are put out of business every year due to late payments. The organisation has argued that an end to delayed payments in the construction supply chain could see £2.5bn added to the UK economy.
The Specialist Engineering Contractors’ (SEC) Group, which has also been involved in the process of shaping and promoting the retentions bill, last week cautiously welcomed commitments in the Spring Statement to tackle delays in payment.
The group said it would now be inviting the chancellor to “act swiftly” in implementing measures to improve long-term payment security for small companies, which it said make up a significant part of the UK construction supply chain.
SEC Group chief executive Rudi Klein argued that the construction industry was the worst sector for payment abuse despite 25 different initiatives over the last ten years to tackle the issue of payment performance. These initiatives include the publication of several reports and the introduction of codes and charters.
He said, “All these initiatives have not brought about the hoped-for improvements in cashflow security. However, the wording of the chancellor’s statement appears to show a determination to deal with the problem once and for all.”