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Nine out of 10 councils failing to monitor 30-day payment rule

Almost nine out of 10 local authorities are in breach of government payment practices by failing to check whether their supply chain is getting paid within 30 days for construction work, new data has shown.

The findings have been obtained via Freedom of Information data received by specialist contracting trade bodies – the Electrical Contractors Association and Building Engineering Services Association. The request reveals that 89% of local authorities are not ensuring prompt payment measures and do not know if contractors are getting paid within 30 days of work.

Nearly one in five councils also said they had no intention of building in contractual requirements for 30-day payment. While 18% of councils said they had no intention of building in contractual requirements.

BESA public affairs manager Alexi Ozioro said while he welcomed more debate by the government on the issue, he said more action was still necessary to counter the problem. “There has been much talk of the payment culture change needed in the industry, and public bodies need to lead by example,” he added. “The industrial strategy calls for a fairer payment system, the chancellor has highlighted the need to tackle late payments and a Crown Commercial Services consultation even poses excluding bad payers from public contracts.”

ECA deputy director Rob Driscoll added: “Non-compliance by the public sector with the Public Contracts Regulations is unacceptable. This is especially significant given the cautionary tale of the collapse of Carillion – one of the key strategic suppliers to government – which ultimately had a wider impact on SMEs. If government purports to support fairer payment practices, these findings show that there is work to be done. ECA and BESA will continue to work with industry and government to deliver a fairer payments system in construction.”

The latest data comes not long after the Association for Consultancy and Engineering (ACE) met with Philip King, chair of the Prompt Payment Code’s compliance board, after the trade body’s members had raised issues regarding poor payment practices from signatories of the code.

The meeting is just one small part of a wider campaign within parliament and the industry to tackle poor payment. Debate was sparked earlier this year after it was revealed that industry giant Carillion collapsed while owing its supply chain tens of millions of pounds in unpaid fees and cash retentions.

The Department for Business, Energy and Industrial Strategy (BEIS) will be launching a call for evidence on how to eliminate unfair payment practices for small businesses later in the year.