The power is in your hands

December 17, 2019

With the dust now settling from the General Election, there’s never been a better time to get hold of your newly-elected MP and pressure them to join the fight against payment abuse

 

As I write this, we’re in the midst of a General Election to vote in 646 members of the House of Commons. By the time that this column is published, we’ll know who has been elected.

 

So, as soon as possible after the poll on 12 December, we should be contacting all our MPs with a simple message: Payment abuse = broken lives + broken buildings.

 

Unless they support legislation to enhance payment security for small and medium enterprises (SMEs) in construction, the industry will continue on a downward spiral of declining investment in jobs and skills and of
falling standards and quality.  

 

In contacting new MPs, we should not hold back. They should understand SMEs create the bulk of the industry’s value and the future survival of many of these companies depends on MPs supporting measures to ensure that they are paid.

 

The scourge of insolvency

 

Insolvencies in the construction industry are now running at their highest rate since the recession. 

 

More than 30,000 SMEs in Carillion’s supply chain lost monies when the company collapsed in January 2018. The Business Select Committee in the House of Commons concluded that Carillion had treated them with “contempt”.

 

Just as I’m writing this, the news is that Wetheralds, a Leeds-based specialist painting and decorating contractor, has been forced into liquidation by a string of main contractor bad debts.

 

The final blow for this 33-year-old firm was the loss of £150,000 for work done for the Simons Group, which went into administration in October. This came on top of £911,000 worth of unpaid work for the Shaylor Group, which went into insolvency in the summer. 

 

One Wetheralds director said: “We’ve never seen anything like this. Bigger firms are a law unto themselves – pay less notices and major firms not paying are driving firms out of business.” This is reflected across the UK. Dundee building services company McGill & Co collapsed  this year with the loss of 425 jobs, with administrators blaming delays in payment on a number of significant jobs. In Northern Ireland, M&E contractor Blackbourne Ltd went into insolvency in September, with the Carillion collapse cited as one of the main causes.  And in March, Wales suffered its own version of the Carillion collapse when main contractor Dawnus went bust with almost £40 million left owing to its subcontractors.

 

Getting the message to our MPs

 

SELECT member businesses can make known these problems to all new MPs by sending an email like the one shown left. You can copy and paste the text from www.cabletalkmagazine.com too.

 

Your letter should draw on your own experiences. How many payments are made late or for less than the amount applied for? Have you lost significant sums as a result of insolvencies?  

 

And remember; On public sector projects, unlike their subcontractors, Tier 1 contractors don’t carry any insolvency risk – public bodies do not go into insolvency.

 

Always emphasise the broader impact of payment abuse. As we outline elsewhere in this issue of CABLEtalk, it is a substantial cause of mental health issues amongst business owners and senior employees which, in turn, has repercussions for family relationships.

Also, poor payment practices help drive poor behaviours which, in turn, drive poor quality, according to Dame Judith Hackitt who produced a report in May 2018 on improving building safety following the Grenfell tragedy.

 

Please amend this template to suit your circumstances. Responses should be sent to SELECT, with a copy to contact@secroup.org.uk The responses will help us continue the campaign on your behalf to improve payment security.

 

 

By Professor Rudi Klein

SEC Group CEO and Barrister

 

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