One of our companies works purely on social housing projects for housing associations and societies. The funding for these projects comes from the Housing Corporation, which in turn is funded by the Treasury, so the link to the government is clear. Normally the funding is in place before the work is carried out and there is no reason for late payment. However it does occur too regularly.
One of the positive implementations of the Construction Act was the right to charge interest on late payments and the inclusion of a relevant clause in the contracts. Yet, in seven out of the nine projects that we are currently working on for government-funded clients, the relevant clause of the JCT 1998 Contract With Contractors Design has been deleted.
This deletion removes the sugar-coating from the bitter pill of late payment and gives no incentive for the client to make sure they pay on time. Perhaps the first change to the Construction Act should be to make it illegal to remove the interest on late payments clause.
Jeremy Thorp, via email