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UK Councils Not Following 30-Day Payment Rule

Local authorities in the United Kingdom, known as councils, are facing backlash from construction associations after freedom of information (FOI) requests revealed about 90% of councils were not enforcing construction firms to pay supply chains within 30 days as required by legislation.

Under "Miscellaneous Provisions" in Chapter Nine of the Public Contracts Regulations 2015 (PCR2015), payment from "the contracting authority to the contractor under the contract is to be made no later than the end of a period of 30 days from the date on which the relevant invoice is regarded as valid and undisputed." According to news website The Construction Index, the Electrical Contractors Association (ECA) and the Building Engineering Services Association (BESA) submitted FOIs, which found almost nine in 10 councils were not in compliance. PCR2015 requires public bodies to enforce the 30-day payment rule.

"Noncompliance by the public sector with the [PCR2015] is unacceptable," ECA Deputy Director of Business and Policy Rob Driscoll said in the article. "This is especially significant given the cautionary tale of the collapse of Carillion—one of the key strategic suppliers to government—which ultimately had a wider impact on [small- and medium-sized enterprises]."

The trade groups are now calling for the government and construction industry to collaborate on developing a "fairer payments system." Fairer practices will not only correct enforcement, but also redirect the 49% of councils that said they do not have, or do not know whether they have, the 30-day payment rule in the contracts. The FOI also noted that 18% of councils do not plan on implementing this requirement into contracts.

-Andrew Michaels, editorial associate

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Wednesday, 12 August 2020