or expelling signatories, it is finally applying some pressure on the large companies to change their ways. But, so far, only Costain has been re-admitted as a signatory. It will be interesting to see whether
or not other suspended firms will be successful in improving their payment performance. I suspect many will not bother unless there are consequences for not being a signatory.
Consequences of not being a signatory
The problem has always been that there’s no incentive to be a signatory to the PPC, and generally clients don’t care if a main contractor is signed up or not. This may change if the UK Government sticks to implementing its threat to exclude from bidding main contractors who haven’t paid their subcontractors within 60 days on 95% of their invoices, although this percentage is now reduced to 75%. But this policy appears to be at odds with the statutory duty imposed on UK Government procurers to ensure that there are 30-day payment clauses in all subcontracts. I reserve judgment on whether this
policy will have a significant impact but, for the moment, the PPC is still as useful as that proverbial hot water bottle. However, this could change if the Small Business Commissioner is given the power to penalise late payers.
Relevance to Scotland The PPC has never had much traction in Scotland, and a
voluntary code will never make
Scotland in May this year, based on a survey of firms including SELECT Member businesses, revealed that almost half of payments to 45% of subcontractors on public sector works were late, with 85% of firms on public sector contracts not receiving any payment within 30 days. Release of retention monies takes
longer and longer, and the PPC doesn’t deal with the other major type of abuse,
any difference. There are only two measures that will have an impact – project bank accounts (PBAs) and protection of retention monies. PBAs prevent monies passing through different pockets; clients make payment to a ring-fenced bank account from which all project participants are paid. The ambition
which is the failure to pay the correct amount. Time and time again, small businesses suffer shortfalls in their payments, with the only remedy costly adjudication.
The only thing that can be said about the PPC is that, in suspending
must be to mandate the use of PBAs for all construction works in Scotland. The Scottish Government is currently considering reform of the retentions system and SELECT and SEC Group Scotland continue to apply pressure for laws to protect retentions by insisting they are deposited in a trust.
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