SEC Group calls for improved payment security for specialist contractor SMEs

The Specialist Engineering Contractors’ (SEC) Group is calling on the Government to improve payment security of  SME specialist contractors. It is also saying that funding is necessary to ensure a strong forward pipeline of  construction work.

SEC Group represents the largest sector (by value) in UK construction and it has submitted evidence to the House of Commons Business Select Committee’s that is inquiring into the impact of COVID-19 on businesses and workers. SEC Group’s 10 point plan is calling for steps to be taken to protect supply chain payment security.

Commenting on behalf of SEC Group, Lord O’Neill, the Group’s President, said that there is an urgent priority to protect SMEs in the supply chains which provide the bulk of construction’s added value. He added: “I’m now getting several reports of firms running out of cash during the coming months.  Therefore, our efforts must be directed towards an approach that involves fast-tracking future workloads and enhancing payment security.”

Recommendations

SEC Group is asking the Select Committee to recommend the following actions to support SMEs and revive construction:

1. Working with the Local Government Association and Local Enterprise Partnerships the Government should use the new £30bn construction framework to develop national and regional pipelines of work to be undertaken by SMEs.
2. A reduction in VAT for construction-related work especially repair and maintenance to stimulate demand (according to the CBI every £1 spent on construction generates £2.92 for the economy).
3. To improve payment security for construction SMEs the Government should now adopt Lord Mendlesohn’s Bill, the Small Business Commissioner and Late Payments etc. Bill.
4. The Government should also adopt the now lapsed Construction (Retention Deposit Schemes) Bill 2017-19 introduced by Peter Aldous MP in January 2018.
5. The 2015 Public Contracts Regulations should be amended to enable contracting authorities to make direct payments to sub-contractors.
6. The Government should urgently commence a dialogue with the private sector client organisations who regularly procure construction to find out their future pipelines of work and how they will ensure SMEs within their supply chains are properly paid.
7. The Government should consider introducing regulations under the Civil Contingencies Act 2004 to suspend indefinitely contractual claims and counterclaims arising from the lockdown and require the immediate settlement of debts incurred prior to and during the lockdown.
8. The Government should now legislate to introduce a moratorium to give firms on brink of insolvency a “breathing space” in which to negotiate a way forward with creditors.

While evidence is emerging of more and more sites re-opening and public sector bodies are keen to keep their sites going, invitations to tender published by the wider public sector in April were down 66% on the pre-COVID-19 crisis level in February (source: Tussell)

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