New Bill will improve payment to m&e contractors

The Government has published a new bill to improve current legislation on commercial contracts to provide a fairer system for construction companies and improve cash flow – especially important for small and medium construction companies.

The Local Democracy, Economic Development and Construction Bill was published on 5 December. Among wide-ranging commitments are amendments to Part 2 of the Housing Grants, Construction and Regeneration Act 1996 - to improve cash flow and the referral of disputes to adjudication under construction contracts.

The amendments include:

o Removing the requirement that construction contracts be in writing

o Introducing a proper framework for adjudication costs

o Removing restrictions on which party can issue payment notices, giving greater power to subcontractors

o Introducing a “fall back” provision, which will allow contractors to issue a payment notice if the payer fails to do so

o Banning “pay when certified” clauses

o Reinforcing the right to suspend work in the event of non-payment