Aug
04
Putting an end to unfair payment practices
As a member of Build UK, BWF is supporting the Build UK response to the Government consultation which proposes to exclude suppliers from major Government procurements if they cannot demonstrate a fair, effective and responsible approach to payment.
Whilst fully supportive of Government’s efforts to enforce prompt payment, as confirmed at a recent roundtable with Minister for Implementation Oliver Dowden MP, Build UK will highlight the need to build on existing initiatives and ensure any requirements are implemented consistently across the public sector. BWF has already written to Mr Dowden on this matter:
Dear Mr Dowden,
I read with interest and some enthusiasm this week your comments on improving procurement and as part of this clamping down on late payment – the contracts finder website is a good initiative and we hope it will be a real success. On late payments, at the British Woodworking Federation (we represent the wood products sector, circa £3.8 billion in the UK), this is a subject very dear to our heart. The recent Carillion failure was hard on companies in our sector (and I do not believe we have seen the full impact yet) with retentions and late payment contributing to the damage (£700m worth of retentions were lost in construction over the last three years due to upstream insolvencies). We are hopeful that the Peter Aldous Bill being hear on the 27th April presents a way of starting to deal with the retentions issue, but fair payment is a challenge (we agree fully with his proposals), but beyond retentions, late payment remains a cancer at the core of our sector.
My concern is that the enforcement again remains out of proportion to the scale of the problem and that behind the encouraging words the activity remains passive. In your quote below, you use the term “should not” when linking payment to contracts:
“It is right then that the government today announces, as part of a new package to boost SME procurement, that it will clamp down on poor payment practice throughout public procurement supply chains. Companies who pay late should not be rewarded with public sector contracts. We need a robust public procurement process that holds larger companies to account for their payment practices.”
Already we have in the public sector 30 day terms, but this is often flouted (with Carillion being a prime example). We need active and robust enforcement of this sentiment, including clear examples of where companies are removed from tenders and this to publicised. To demonstrate this, below I have picked at random one contractor from the payment practice website. Genuinely this is the second one I picked and there was no report on the first one, I have redacted the company name because I did not want this to appear as an attack one one company rather than to exemplify an endemic problem:
Reporting Period 1st July 2017 – 31st December 2017
Payment Statistics: Average time taken to pay invoices 57 days
Invoices paid:
Within 30 days 22%
Within 30 days 22%
in 31-60 days 42%
in 61 or more days 36%
Invoices due, but not paid within agreed terms 81%
Source: www.bwf.org.uk