Industry clashes over new payment proposals

27.06.2007
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A war of words has erupted between construction industry bodies in the wake of the government's proposed changes to payment practices as part of its review of the 1996 Construction Act.



The consultation document, which was issued last week, contains a proposal to pin down sums that are owed to subcontractors on the final date for payment, which has angered main contractors.

Construction Confederation (CC) chief executive Stephen Ratcliffe attacked the document. He said: "It is likely to increase red tape and can only be implemented with considerable cost to the industry."

But Specialist Engineering Contractors (SEC) Group chief executive Rudi Klein blasted the CC's reaction, calling it a "stupid and crass response". He added: "They've said it's going to cost the industry more to require people to know where they stand on payments. How can that be?

"At the moment, 99% of firms in construction are SMEs that spend a fortune trying to define their own payment entitlements. It's a massive burden and you don't know where you stand."

Klein wants the government to be more radical. "We're 65% of the way there. But one thing the government should have done is to have the process start with an application for payment from the payee. Instead, they are still starting with notice from the payer."

A CC spokesman dismissed Klein's criticism as unrepresentative of the wider industry. He added: "It is unfortunate that this does not seem to be a very measured or reasonable response at a time when the industry is working hard to rid itself of this kind of adversarial approach to business."

But other representatives of smaller construction firms also welcomed the proposed amendments to the Act.

Brian Berry, director of external affairs at the Federation of Master Builders, said: "The government proposals are a welcome step to ensure better management of cashflow. Poor payment practice continues to be a major concern for subcontractors."

Meanwhile, National Specialist Contractors Council (NSCC) president Simon Bottomley said: "I am delighted to see this consultation document finally published. Specialist contractors continue to provide NSCC with evidence of extended payment terms, unfair contract conditions and blatantly abusive payment practices."


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Source: Neil Gerrard- Contract Journal- 27/06/07

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