Payment charter’s enforcement measures are still unknown five months after the charter was published
Specialist contractors have urged business secretary Vince Cable to publish details of how the Construction Supply Chain Payment Charter will be monitored and enforced by the end of next month.
The payment charter, which was published by the Construction Leadership Council (CLC) in April, commits signatories to ensuring their supply chain is paid within 60 days, and then within 45 days from June 2015 and 30 days from January 2018.
It also commits clients that sign up to stop holding retention payments.
But five months on Cable’s BIS department - which oversees the work of the CLC - has not launched mechanisms for monitoring enforcement of the charter, or penalties for those that sign up but do not comply to the requirements.
Yesterday the National Specialist Contractors’ Council (NSCC) published an open letter to Cable urging him to take action.
The letter said previous governments’ moves to improve payment in the industry had been harmed by a “lack of monitoring and enforcement” and this meant that “to date neither the public sector nor the supply chain has realised the full benefit of the various commitments”.
It urged Cable to “confirm” all companies working on public sector projects would have to sign the charter and that “action will be taken where companies do not meet the commitments”.
It also added that he should also “publish a process for monitoring and enforcing compliance with the charter by signatories”.
Speaking to Building, chief executive of NSCC Suzannah Nichol said the process of agreeing monitoring mechanisms was “proving more difficult than anticipated”.
She added: “A lot of people are interested in the charter and making it happen but they can’t sign up to it without knowing what the implications of that are.”
Nichol said: “Our members are pushing them [minsters] on this and I would like to report back to them at the end of October what the monitoring and enforcement arrangements would be.”
Rudi Klein, chief executive of the Specialist Engineering Contractors’ (SEC) Group, backed the NSCC’s letter and said the charter’s success was fundamental to the government’s broader strategy for the sector.
He said: “All the grand targets and ambition that the government construction strategy for 2025 will deliver are dependent on cash flowing through the supply chain and this charter is the way that we are going to deliver an uninterrupted cash flow.”
Klein said a “fully resourced” charter ombudsman was required to monitor compliance and take action where firms didn’t meet the charter’s requirements.
A spokesperson for BIS said the government believed that “fair and transparent payment practices” were “essential for a strong, resilient and sustainable supply chain”.
She added that Philip King, chief executive of the Institute of Credit Management, was “leading the development of monitoring arrangements” for the commitments made by signatories to the charter.