The government should ensure its construction supply chains are paid promptly and sub-contractors receive retention payments during the Covid-19 crisis, according to a member of the Construction Leadership Council (CLC).
Ann Bentley, global board director of the consultant Rider Levett Bucknall, told a webinar hosted by the Building Engineering Services Association (BESA) that both public and private sector clients should be ensuring cash was available to SMEs to help them survive the current upheaval.
“The CLC has put pressure on government departments to show the way on payment,” she said. “While the initial reaction was supportive there has been some rowing back with bureaucracy coming into the conversation, which is disappointing.”
The CLC wrote to the Prime Minister last week urging him to instruct clients to release £4.5bn, which is currently being withheld from contractors in the form of retention payments, to help relieve some of the cash flow pressures building up in supply chains.
“We feel government departments should be setting a good example,” she told BESA chief executive David Frise, who chaired the webinar. “After all, the amount of money held in retentions is several magnitudes smaller than what the government is spending on furloughed workers.”
Ms Bentley also told the webinar that the Cabinet Office was already working on plans for the economic recovery with construction at the forefront. The CLC is lobbying for a quick return of major infrastructure projects as these will have multiple knock-on benefits for society and the wider economy.
“Equally, there are lots of smaller projects that could get up and running very quickly and these will be an important part of the wider economic recovery,” she said. However, she cautioned that many contracts would have to be re-negotiated to help contractors get through the coming weeks.
“This is an industry that operates on very slim margins so many businesses will struggle to sustain low activity levels for much longer.”
