Executive opinion No delay
ECA group chief executive officer STEVE BRATT considers what’s needed to ensure any economic upturn is maintained
A
re we finally seeing a real recovery? Gross Domestic Product (GDP) grew 0.8 per cent from July to September 2013, which represents an annualised rate in excess of 3 per cent – more than the
long-term average. And what about construction? It grew 2.5 per cent
in the third quarter. This represents a 4.9 per cent year- on-year rise, and it made a 15 per cent contribution to overall GDP growth. This is all good news. However, to add some perspective, the level of construction in this quarter was still 12.5 per cent lower than five years ago. So what is driving this growth? It appears to be
fuelled in large part by house building, driven by government-backed initiatives such as the Help to Buy Scheme. It is also being bolstered by spend on large infrastructure projects such as Crossrail.
Infrastructure So will it continue? Well, such a question is well above my pay grade. However, there are certain things that might just help. For instance, establishing some certainty around infrastructure projects would be a very good thing. If we could find a way for infrastructure to be viewed strategically – and to transcend party politics – that would surely save us having to secure last-minute power generation deals or debate over and over again projects such as HS2. Well, there is hope on the horizon. The Armitt
Review, undertaken by Sir John Armitt – former CEO of Network Rail and Chairman of the Olympic Development Authority – has recently been published. In summary, it recommends that a cross-party National Infrastructure Commission is established with a remit to identify infrastructure needs looking 25 years forward and to agree, through cross-parliamentary consensus, 10-year sector delivery plans, which the commission would monitor. I just hope that something comes from this, as we
know how important infrastructure is to attracting investment in the UK, and how important it is to the construction sector. The UK is currently rated 28th in the world for quality of infrastructure. We would, therefore, no doubt all benefit hugely from the stability that a development like this might bring, in terms of growth, cost efficiency, skills planning and so on. What else is needed to maintain the positive changes in the economy? Successful SMEs, I would suggest – SMEs that can grow by taking on apprentices and other staff, buying new equipment,
Our aim is to ensure something positive and constructive comes from all this attention
and diversifying their businesses. To do this, SMEs need to be able to lift their heads way above the fight to remain solvent, and trade with confidence. And that means getting paid promptly and fairly. As I write this, more than £30 billion is currently
owed in overdue payments to SMEs in the UK. This is simply outrageous. We all know it is happening, and last month even David Cameron joined the long list of politicians acknowledging that things must change, launching a government consultation on the issue. We have told government that the current Prompt Payment Code (PPC) is not working; that we need a payment ombudsman; that the central government payment arrangement for Tier 1 contractors should be driven down the supply chain; that the current trend to extend payment terms should be stopped and the EU Late Payment of Commercial Debt Regulations strongly enforced; that Project Bank Accounts should be widely adopted; and much more. So is anything going to happen? There is certainly plenty of discussion. For instance, we have the Construction Leadership Council looking at the issue, Lord Young’s report on helping SMEs, a proposed Construction Payment Charter – I could go on... Earlier this year, we deployed our survey of ECA
members to persuade construction minister Michael Fallon MP that action is necessary. We met him with SME members to outline why late payment is so damaging. And, on a very positive note, we’re heartened to see that, as a result of our lobbying, government announced in mid-October its intention to require main contractors on public works to pass on paymemt terms within 30 days. Following this policy shift, we’re now asking government how this fits in with the fair payment charter.
About the author
Steve Bratt was appointed group chief executive officer of the ECA in October 2010. He joined the ECA as chief operating officer in 2007, becoming deputy CEO in February 2010.
Constructive Our aim is to ensure something positive and constructive comes from all this attention – an outcome that will finally address the issue of poor payment practice. The ECA will continue to push for change with all of these initiatives and will keep you up to date as the situation develops. In the meantime, I would urge you to follow the
advice we give to make sure that you know what your rights are, what you are signing up to and what you can do if things don’t go as planned. More opportunities are coming along, and we want to help ECA members to be well placed to take advantage of them with the confidence of payment that they rightly expect.
December 2013 ECA Today 21
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