04 December 2019 | Herpreet Kaur Grewal
The new government must do everything it can to solve the late payment problems that continue to undermine construction supply chains, according to the Building Engineering Services Association (BESA) CEO David Frise.
Frise told the association's national conference that Whitehall was "terrified of another Carillion style collapse" and the huge damage that it would cause to public sector infrastructure plans.
However, repeated failures to reform the industry's "payment culture" meant another major insolvency was possible.
Frise told delegates that poor payment behaviour was part of a culture highlighted in the Hackitt Review that led to "broken buildings and broken people". He added that the General Election was an opportunity to explain to politicians that the issue of late payment would undermine plans to tackle climate change.
Frise said: "The huge burden of debt created by the ongoing abuse of cash retentions is forcing many SMEs out of business and robbing our country of their vital expertise."
A recent survey carried out by BESA and the Electrical Contractors' Association found that nine out of 10 small business owners were suffering from stress and other mental health conditions because of late payment.
They also found that half of all small business owners and managing directors had been forced to stop their own pay and one in 10 admitted to being forced to pay their own staff late.
More than one in three have fallen behind on tax bills and almost a quarter have cancelled training programmes due to payments being unfairly withheld by clients.
This could be tackled if the next government legislated to safeguard money due to subcontractors - as proposed in the 'Aldous Bill', which BESA helped to draft and that gained cross-party support during the last Parliament.
Frise said a "revolution" was coming because Hackitt had identified problems of "ignorance and indifference" across the industry "along with lack of enforcement, competence, compliance and failure to take responsibility".