Trade bodies lobby MPs for help as main contractors move to adopt longer payment periods
Kier has become the latest contractor to admit extending its payment terms to 60 days, amid growing concern that such payment periods have become the norm among main contractors in the downturn.
Earlier this month, Rok announced it was extending its standard payment terms from 30 to 60 days for new contracts. It joined Carillion, which also practices 60-day payments. The delay in payment is seen as potentially damaging to specialist contractors struggling with low work volumes.
A spokesperson for Kier confirmed: “Sixty days is a general starting point for payment for some suppliers and subcontractors but we have a sensible commercial decision process that has due regard for the company concerned and the individual circumstances.”
Suzannah Nichol, chief executive of the National Specialist Contractors Council, said members were reporting main contractors previously known for good payment times moving to 60-day payments.
“We are becoming concerned that more and more main contractors are moving to 60 days as the standard, when specialists require 30 days to survive,” she said.
Julia Evans, chief executive of the National Federation of Builders, said she had met Mark Prisk, the shadow minister for construction, in July to discuss late payments, and was in the process of arranging a meeting with construction minister Ian Lucas to push the issue. “Late payment terms are on the increase. Payment should be without delay,” Evans said.
Roderick Pettigrew, deputy chief executive of the Heating and Ventilating Contractors’ Association, said the body had also written to Lucas. “We have major concerns,” he said. “There has to be some funding of these extensions – and that is hitting the SMEs and specialists.”