The UK Government has called on construction clients and major contractors not to withhold payments to their supply chain and not to penalise companies contractually for the impacts of Covid-19.
In a statement issued jointly with the Construction Leadership Council (CLC) which represents the industry in the UK, the Government reports that some firms have already been holding back payments to their supply chain:
“Our Construction Industry Task Force colleagues have brought to our attention that there are a number of businesses that have chosen to unilaterally delay payment or extend credit terms. We do not believe this is acceptable or appropriate – particularly at this time of great stress.”
The UK Government has implemented procurement policy which orders public sector clients to continue to pay all suppliers who are at risk due to Covid19 until at least the end of June 2020. The definition of ‘at risk’ It is at the discretion of the contracting authority, but the Government has said that most construction suppliers will be ‘at risk’.
The joint statement, which is signed by Andy Mitchell, chair of the CLC and chief executive of London’s super sewer project Tideway, finishes by saying:
“We owe it to our sector and the country to take all steps necessary to ensure that the industry is in good health to support the recovery, when it comes. It is everyone’s responsibility to keep money moving in the sector and vital that all businesses play their part by maintaining payment and by managing contracts responsibly.”