A reception hosted by Debbie Abrahams MP last night revealed (11 February) more cases of retentions and payment abuse, providing more weight and supporting evidence for the Time for Change campaign launched by H&V News last November.
Beginning with speeches by Lord O’Neill of Clackmannan and Ms Abrahams, the main purpose of the event was to highlight research by the Specialist Engineering Contractors’ (SEC) Group on the state of procurement within public-sector construction.
Among its findings was the fact that 38% of public-body respondents were in breach of payment legislation, having failed to pay their tier one contractors within 30 days.
SEC Group had conducted the survey over the course of the previous 12 months through questions submitted under the Freedom of Information Act.
Respondents included local councils, NHS trusts, emergency services and universities.
Only 25% of those surveyed could confirm that they had measures in place to track payment performance in the supply chain and nearly 90% applied a cash retention.
The majority of respondents also admitted using the cash raised to supplement their working capital, and 86% did not use the PAS 91 standard pre-qualification questionnaire.
Ms Abrahams said: “The public sector should be setting an example in how to manage and treat its construction supply chains and should be the foundation on which we build a fair payment culture in this country.”
SEC Group has issued a six-point action plan:
- All payments under public-sector construction contracts should be made within 30 days of the end of the month in which the work was carried out.
- Any organisation failing to pay its supply chain within 30 days should be excluded from further public-sector work for a minimum of 12 months.
- Legislation must be introduced to require all cash retentions to be placed in trust (in a segregated account) for the benefit of the firms providing the monies.
- Targets should be set for the introduction of project bank accounts across the public sector, to ensure that the supply chain is guaranteed payment.
- The pre-qualification process should be standardised across the whole of the public sector through the introduction of a British standard.
- The office of public procurement ombudsman should be created to monitor and police poor practice.
Referring to the proposal for an ombudsman, SEC Group chief executive Professor Rudi Klein stressed that this needed to be a high-profile role: “The regulator would have the power to challenge poor practices and to order recalcitrant public bodies to mend their ways.”
He added: “There is an expectation that small and medium-sized construction businesses will invest in skills and training and smart technologies with the efficiencies thereby created directly benefiting the public sector.
“But this is not achievable unless robust measures are adopted to improve cash flow throughout the supply chain.”
SEC Group has been a supporter of Time for Change since its launch last November.
How you can get involved
- Sign the online petition
- Contact your MP and ask them to support the initiative
- Follow H&V News on Twitter using the #Time4Change hashtag to keep up to date with the campaign
- Join the conversation on LinkedIn to let us know how you’ve been affected by retentions and to hear other people’s stories