Newspaper article The Journal (Newcastle, England)

Call for Bans for the Late Payment of Contractors; PAYMENTS

Newspaper article The Journal (Newcastle, England)

Call for Bans for the Late Payment of Contractors; PAYMENTS

Article excerpt


BUSINESS leaders are calling for a "three strikes" rule to be introduced for firms that do not pay their contractors on time, following the collapse of construction giant Carillion.

The Federation of Small Businesses is calling for the Government to introduce a strengthened Prompt Payment Code (PPC), which would see FTSE 350 companies banned from applying for public sector contracts if they fail to pay contractors within agreed periods.

The new measures are being called for after it was revealed that before its demise Carillion was forcing small businesses to wait 120 days before they were paid.

Mike Cherry, national chairman at the FSB, said: "Sadly this sorry saga has laid bare the frailties of the Prompt Payment Code. While it is fundamentally a good idea, it does not work when it is most needed - as shown with Carillion's behaviour since July 2017.

"Although they were signatories of the PPC, Carillion were able to use their dominant position to squeeze smaller firms to mask their own financial failings. This irresponsible behaviour has put many small businesses in jeopardy, with countless people fearing for their jobs. Government must step in immediately to strengthen the PPC by making it mandatory for all FTSE 350 businesses and introducing a tough penalty regime for those companies flouting the rules. Companies taking advantage of small businesses for their own gains should have no right to public sector contracts.

"The Small Business Commissioner needs to be given responsibility to toughen up the Prompt Payment Code. Parliament is today announcing it will scrutinise these issues in a cross-party way, which we hope helps Government chart a new way forward to tackle poor payments."

The UK's late payment culture - which was highlighted by Journal's Pay Fair campaign - has led to many small businesses suffering from cash flow problems, with the average late payment valued at PS6,142. …

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