Heating and Ventilating

Last night in the House of Lords, Lord Borrie took up the struggle for payment security in the construction sector and pushed for the industry's need for the payee to initiate the payment process.
Having tabled amendments to the Construction Act, (Local Democracy, Economic Development and Construction Bill), Labour peer Gordon Borrie called on the House to help him help the SME.

Lord Borrie told the House:

“It is commonly understood in the construction industry that many small firms suffer through poor payment practices. SMEs are mainly, of course, the subcontractors in the supply chain; they are the heating and electrical contractors, the plumbers, glaziers and others. One hardly needs a crystal ball to assert that, at a time of recession like this, SMEs are at greater risk than ever, whether in this industry or otherwise.

“My amendments to Clauses 137 and 138 would simplify the whole procedure. It would make the procedure fairer to all parties, and there would be less bureaucracy by enabling the payee—the person who has been doing the work and supplying the goods—and only the payee to issue the initial payment notice. This is, after all, what other industries do. The payer does not give the initial payment request'.

He added: “If the payer, as the government propose as an alternative, is the most likely person to give the initial notice, a challenge to that payment request could be made only by going to adjudication. Of course, under the scheme proposed by my amendments, when the payee issues the initial invoice, as it were, on the payment due, the payer may wish to challenge that. He may wish to say, “This is not what was agreed”, “The work has not been done properly” or, “The goods delivered are defective”. The payer, as the Bill allows, may also wish to issue a notice to pay less than the notified sum”.

The amendments did face some opposition, with Lord Brett speaking up to question the need for them and the SEC group’s credentials as representative of the UK’s SME base.

The amendments had been previously backed but later withdrawn by Lord O'Neill of Clackmannan, following allegations of 'cash for amendments' (he received a fee as president of the Specialist Engineering Contractors' Group).