The National Federation of Builders (NFB) has welcomed the decision to remove or suspend a number of major construction firms from the Institute of Credit Management’s Prompt Payment Code for failing to pay suppliers on time.

It pointed out that its Chief Executive, Richard Beresford, had recently urged the Government “to show the industry its teeth” in enforcing existing payment legislation and policy to promote greater fairness across the supply chain and increase confidence in the construction industry.

The announcement to suspend or remove some of the worst offenders was therefore a step in the right direction.

However, Mr Beresford said: “A few days of negative publicity won’t hit these late payment offenders where it hurts. A financial consequence, such as denying access to public contracts, is the only way to make them sit up and listen. We await autumn’s initiative to see if the Government can really put its money where its mouth is”.

Currently, he highlighted that the Prompt Payment Code, under which firms pledge to pay 95% of all supplier invoices within 60 days, is voluntary.

The seven businesses suspended from the Code have been invited to produce a plan setting out how they will achieve compliance within a set time period. Once these agreed compliance terms are met, they can seek reinstatement.

So far, the Government has only said that companies which fail to demonstrate fair payment practices to their suppliers “could” be prevented from winning Government contracts, rather than “will” do so.

Last reviewed 15 May 2019