Feature Industry Comment
It’s payback time O
With many firms still finding it challenging to get paid, Steve Bratt, group CEO of the Electrical Contractors’ Association (ECA), calls for action in this, his latest column for Electrical Engineering magazine
ne thing that isn’t in an elec- trical contractor’s toolbag is a crystal ball - so predicting the future of the economy is
anyone’s guess. What we do know for certain is that construction grew in the fourth quarter of 2012. A green shoot for the industry, but that does- n’t mean the sector is in full recovery just yet.
The government has indeed taken positive steps. Construction is higher up the government agenda than at any time in the recent past, and there is recognition that construction can have a big impact on the recovery. In fact, at a dinner I recently attended with Lord Deighton, the commercial secretary to the treasury, much was made of the importance of speeding up infrastruc- ture delivery.
The recent Budget also allocated billions of pounds towards infra- structure projects, but we need to make something happen sooner rather than later. It was therefore good to hear Lord Deighton say that he wants to fill up the order book, cut some of the current restrictions and reduce red tape. We also will be watching with interest to see how support for the house building market will trickle down to the boots on the ground.
Overdue payments
Above: Steve Bratt, group CEO of the ECA
Right: many
businesses in the construction sector have suffered from late payment - SMEs in the UK supply chains are owed in excess of £30bn in overdue payments
And that trickling down is, of course, the crux of the issue. Money needs to flow more swiftly down the supply chains. Many businesses in our sector have suffered from late payment - SMEs in the UK supply chains are owed in excess of £30bn in overdue payments. Unfortunately, the ECA is seeing an increase in payment issues - and also some very unsavoury prac- tices from clients and contractors at the top of the supply chain. This growing issue is having a significant impact on the electrical contracting sector and the cash flow of otherwise healthy firms.
In this context it has been encourag- ing to note business minister Michael Fallon’s attempts to get all FTSE 350 companies to sign-up to the Prompt Payment Code - a voluntary agreement to promote good payment practices. The code has been around for four years now, but in a letter to the compa- nies last November, Fallon warned that those who did not sign-up would now be publicly named. While this is undoubtedly a step forward in encour- aging some of the biggest players to adopt good payment practice, or be put under the spotlight for not doing so, the government could - and should - take further important steps towards getting
he Electrical Contractors’ Association has taken training concerns to the heart of government, by meeting with skills minister, Matthew Hancock. In the wide ranging meeting covering funding and training quality, Hancock agreed with the ECA that local authorities need better guidance on incorporat- ing apprenticeships into the procurement process. He advised that the National Apprenticeship Service is currently developing guidelines in a bid to boost apprenticeship recruitment. At present, authorities can specify that a contrac- tor must take on a certain number of local appren- tices as part of a construction contract. However, this process can do more harm than good. If the project finishes before a trainee completes their apprenticeship, they can’t always transfer to a differ- ent framework, even in a neighbouring borough, leaving them unable to qualify. The forthcoming guidance aims to help local authorities work with contractors throughout the
18
ECA raises industry concerns with skills minister T
Iain Macdonald, ECA head of Education and
Training, commented, “The issue of apprenticeships in procurement is an issue that affects contractors of all sizes and in all disciplines, so it must be tackled urgently. Once the guidance is published, we hope that local authorities, and indeed housing associations, use it so that where there is work, there will be meaningful and lasting training. “As a body representing employers in a key part of the supply chain, this was an important opportunity to raise industry views on skills, and to find the minister so open to our concerns over training provision. We trust that our input will be valuable in building a strong training legacy that Britain can be proud of.”
the good payment message across. To do that is very simple - if a com- pany wants to bid for and win a gov- ernment or public sector contract, it must sign-up to the Prompt Payment Code (PPC).
The government should then look to toughen the criteria for signing-up to the PPC. Only those organisations working on government or public sector projects that pay their subcon- tractors in 30 days or less should be permitted to sign - in line with the cur- rent requirements for central govern- ment contracts.
For private sector work, the govern- ment should advise that from October 2013, only companies that pay within 60 days without penalty, interest or charges can sign-up. That would bring the PPC into alignment with recent UK and EU legislation. We’d then like to see organisations that don’t meet this to be removed from the PPC. And if they’re still working directly for the public sector, they should be publi- cally named.
supply chain to ensure that any apprenticeship con- ditions in their procurement contracts promote recruitment, are realistic and address local skills needs. The ECA is working with stakeholders to help ensure the guidance is practical and can be easily applied.
These requirements would drive real change in payment practices across the private and public sector, which should have a hugely beneficial impact on the supply chain. Businesses go under when they don’t have the cash flow to stay trading. And late payment is one of the most damag- ing factors affecting cash flow, so it must be tackled. Taking this step would send a signal to clients and contractors at the top end of the supply chain that would be very difficult to ignore - and it could make a start on freeing up those billions of pounds in over- due payments that are needed to boost the economy.
Electrical Contractors’ Association (ECA)
www.eca.co.uk T: 0207 3134 800
Enter 209 JULY/AUGUST 2013 Electrical Engineering
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52