The prevalence of late payment has long been a concern for all organisations engaged in construction and building engineering services, as it results in negative cash flow, under-investment in skills and training, lack of innovation, the “bullying” of small firms by larger customers and those further up the supply chain and – in the most extreme cases – business failure and consequent workforce unemployment.
Following her election to parliament in January 2011, Debbie Abrahams launched the Be Fair – Pay on Time campaign to raise awareness of the ill effects of late payment and convened a Westminster Hall debate designed to gain political consensus on how to address the issue.
She went on to instigate an all-party enquiry into late payment – in particular, its negative effects on small and medium-sized enterprises – and has taken time from her busy parliamentary schedule to talk directly to practitioners about their own experiences at the “sharp end”.
The resulting report included a number of recommendations that reflect the long-held beliefs and aspirations of the Building & Engineering Services Association (B&ES), its members and the sector it represents. In particular, the report called on the government to:
- promote the adoption of good-practice guidance for supply chain management;
- encourage businesses publicly to confirm their compliance with ethical business practice;
- support the development by trade associations of “fair treatment charters” for their members;
- establish a Construction Code of Conduct overseen by an independent adjudicator;
- introduce a Retentions Monies Bill, whereby cash retained by a customer for a supplier must be held in trust;
- require all pubic-sector contracts to include a pre-qualification questionnaire on a company’s past payment performance; and
- make fair payment a contractual requirement for all new government contracts.
It went on to point out that construction companies were under pressure to agree to unprofitable contracts and “ended up taking short cuts”, resulting in “poor quality, potentially dangerous buildings” as a consequence of “cut-price construction”.
Ms Abrahams – who acted as chair and convenor of the All-Party Enquiry into Late Payments in Small and Medium-sized Enterprises and was the author of the final report – became Labour MP for the Oldham East and Saddleworth constituency in September 2011, following a distinguished career in public health.
She was subsequently appointed parliamentary private secretary to shadow health secretary Andy Burnham and elected as chair of the Parliamentary Labour Party’s Health Committee.