GETTING PAID – THE SMOKE AND MIRRORS
The construction industry still has a host of issues that need resolution, but getting paid continues to be the biggest and most divisive issue of all.
YOU have enough on your plate with a whole host of matters that need your attention and if you spend most of your time trying to get paid, then you have less time to address those other issues that need your attention. As for planning for the future, you probably can’t think beyond the end of the month.
The simple truth is that, as a specialist flooring contractor, if you don’t get paid, you don’t have a business. Regrettably, getting paid is such a major problem and such a controversial issue that, even when it’s discussed, the truth seems to be largely absent. So, why are we as an industry failing to recognise this and why isn’t anything being done to change it?
A few facts
In the October 2017 issue of CFJ we reported the results of a major payment survey we supported.
Some 354 of the respondents were subcontractors, and over 70% had a turnover exceeding £1m. These are all proper firms facing many very real problems, and I’m sure another survey will only repeat what we already know.
87% of subcontractor’s regard poor payment as the main issue impacting their business;
Even on public sector projects, only 25% of subcontractors get paid on time;
And here’s a crucial and always (not just often but always) overlooked fact:
Subcontractors were subject to set off on 89% of their projects and between 9-34% (depending on turnover) said they were subject to set off on every project.
Those companies that engage in such practices certainly won’t be reporting their under-certification and wrongful set off as a result of the Duty to Report on Payment Practices legislation.
Lack of payment is crippling industry
Millions of pounds, goes unpaid, often, forcing you and your fellow specialist contractors to fight disputes and contest onerous claims, as certain main contractors unfairly retain monies paid to them by their clients and often by you the taxpayer.
Time after time our consultants are called in to help specialist contractors who are owed tens or hundreds of thousands of pounds, wrongly held back by main contractors.
We’ve carried out payment surveys, given evidence to a parliamentary inquiry and appeared on local and national radio. And despite government and Build UK claims to the contrary, the payment situation has gone from bad to worse, and the supply chain payment charter has been branded a ‘dismal failure’.
Squabbling won’t resolve matters
This summer you’ll have seen the fact the Build UK contractor members are simply not paying on time. Build UK has hailed publication of their bad payers table as a ‘bold first step’ in reforming payment practices. But, I agree with Neil Walters, national chair of the NFB, who said:
‘Seeing Build UK portray tier one contractors like industry pioneers is the ultimate insult. Build UK members, who make up less than 1% of the construction industry, are failing the 99%. Fair practice is essential to changing the industry culture around payment, not transparency.’
He went on to say: ‘Transparency is a legal requirement, not a bold step.’
Trade associations should be outraged
The trade associations should be outraged at this news, because it’s the clearest evidence yet Build UK is making no progress whatsoever.
The trade associations should be absolutely incandescent with rage at the lack of progress because it is destroying specialist contractors by the day and dismantling the industry one firm at a time.
And as for Build UK continually proclaiming that everything will be well in the industry by working together, the inconvenient truth is that it won’t.
None – that’s right – none of their main contractor members are paying their suppliers within 30 days. Quite simply, Build UK is failing to protect specialist contractors.
Why is nobody taking them to task? Why does it matter?
Quite simply lack of proper payment is destroying the industry
Here are a few recent headlines to contemplate:
- £7bn in Carillion liabilities revealed
- Subbies owed £4m after Titan Construction Management collapse
- Subbies under attack from new breed of aggressive QS
- System makes it too easy to shaft subcontractors
- Failed Cover Structure owes £9m to trade creditors
- Angry subcontractors left with unpaid bills as £37m turnover contractor goes under
- Flooring specialist Polydeck Group in administration
It’s time for a complete re-think of how the industry is run, and that has to come from the grassroots up, because quite simply expecting the leopards to change their spots voluntarily is delusional.