The government is to make 30-day payment periods compulsory in order to enforce prompt payment to subcontractors.
Speaking at networking event the Buff Dining Club in London last week, Paul Morrell, the government’s chief construction adviser, said 30-day payment times would be contractual on public sector jobs. Previously, the government had signed a “fair payment charter” asking contractors to pay suppliers within 30 days.
Morrell said: “If you’re not paying within 30 days, you’re in breach. If you keep that up for long there will come a time when you won’t be working for the government.”
He added that there were better ways of increasing the amount of business government did with SMEs than by breaking up contracts into smaller packages, which would fragment the supply chain. He said there was a perception that big business sometimes acts against the interests of SMEs, and said he needed to be able to show that was not the case.
Meanwhile, Sir Michael Latham stressed the importance of fair payment at a conference to mark the 10th anniversary of partnering contract PPC2000. He said: “Pay on time, but also pay the correct amount.”