New survey reveals shocking failure of government to address payment issue

Published:  09 October, 2014

Barry Ashmore talks about the 'betrayal of the specialist contractor' following findings that they are still suffering from payment abuse

StreetwiseSubbie.com’s latest survey of 216 specialist contractors reveals that despite the voluntary measures put forward by the Construction Leadership Council, and promises from UK government to help those in the construction industry, they are still suffering from payment abuse.

Lack of payment is destroying jobs, killing businesses and hampering economic growth.

Here’s a snapshot of the results from the recent survey by StreetwiseSubbie.com;

The majority of the survey respondents were in outrage, about reverse factoring schemes being offered as a ‘solution’ stating that they were offered 120 day payment terms as ‘early’.

According to the Office of National Statistics’ figures; in the 12 months ending Q3 2013, the highest number of liquidations was in the construction sector at 2,819. Between Q3 2010 and Q2 2012 there were an additional 5,000 construction insolvencies (figures from PwC).

Mr Ashmore has written a paper based on the findings of the survey, which looks at the deep rooted issues behind payment abuse that are killing off Specialist Contracting businesses.

The report looks at the instances of payment terms exceeding 30 days and the uncertainty caused by bad payment practices can mean the difference between survival and failure, with labour and material costs eating away at their cashflow while contractors hold onto the money they so desperately need.

If you have ever run a specialist contracting business, you would know that delaying payment to your labour force or suppliers isn’t an option. The lads walk, and the suppliers put you on stop!

The failure of these small sub-contracting businesses does not reflect well on the growth of the economy or the rebuilding of a strong construction industry. While the ‘overnment plug their ‘Small Business: GREAT Ambition’ initiative and pump money into infrastructure to improve the economy, this report shows the outlook for small businesses in the UK construction industry is as bleak as ever.

If the government does not legislate quickly instead of producing meaningless reports and putting forward toothless solutions, then not only is the construction industry under threat of collapse but so is the economic growth we so desperately need. Small businesses are the foundation of the industry and the economy; we cannot carry on allowing them to fail.

Barry Ashmore is managing director of StreetwiseSubbie.com

He will appear on BBC Radio 5 Live's "Afternoon Edition" today (9 October 2014) to talk about the ‘betrayal of the specialist contractor’ and the government’s failure to implement an effective solution to the problem of payment abuse in the construction industry.