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Watts Bulletin (Issue 144)

Welcome to the first issue of the Watts Bulletin of 2014. We would like to wish a very happy – and prosperous - New Year to all our subscribers. According to recent industry figures (source: Markit/CIPS) more than half of UK construction firms expect to see an uplift in workload during the coming 12 months. Latest figures from Experian released earlier this month tell the same story: construction output grew by 2% in 2013 and is forecast to improve by 4.2% this year. By 2016, the economic commentator expects to see an £8.5bn increase in activity, with infrastructure the biggest driver of growth, closely followed by house building. This is already having a knock-on effect on employment. UK firms in general are expected to take on more graduates during the course of the coming year and construction in particular needs new recruits to meet demand in a sector in which many companies have been forced to shed large numbers of staff. Those investors and developers who were active during the recession reaped the benefits of cheaper labour and materials prices. We are now moving into a phase of recovery that will inevitably mean price inflation making a re-appearance during the next 12 months.

In this issue we take a look at a number of government initiatives: more funding for infrastructure and affordable housing; moves to tackle late payment and improve access to public procurement for SMEs; an updated version of the infrastructure and construction pipelines mapping tool; and more government land released for redevelopment. Finally, we look at a report on the ways in which NHS Estates can promote greater efficiencies by working more closely with the private sector.

Watts Bulletin (Issue 144)

Government tackles late payment

Every year, thousands of businesses experience severe administrative and financial burdens as a result of late payment. In the worst cases, this can lead to companies becoming insolvent through no fault of their own.

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As a result the Government is determined to tackle this issue and has launched a consultation with the aim of improving payment conditions across the whole of British industry. Government contracts are already set up so that public sector bodies are obliged to pay their invoices within 30 days, with central government stating that it pays more than 80% of its invoices within five days of receipt. In future, the government has pledged to:

•    Make sure that small firms are treated fairly by mandating prompt payment terms all the way down public procurement supply chains; and

•    Ensure that all public bodies report on their prompt payment performance.
However, enforcing prompt payment in the wider market is likely to prove more difficult and the consultation launched at the end of last year is seeking the views of business and other private sector stakeholders as to how this can be achieved.

The consultation which closes at the end of January asks:

•    Whether more can be done to change business culture through measures to enhance accountability and transparency;

•    How to encourage small businesses to make better sue of the statutory rights that they already have and whether there is a case for enhancing those rights; and

•    How can small businesses be empowered to help themselves to reduce the risk of late payment.

Brian Berry, chief executive of the Federation of Master Builders told Building magazine (11 December 2013 issue) that he supported the move to 30 day payment terms throughout public sector supply chains and considered it to be “positive that the government is prioritising support for small businesses...” He added that the length of time small firms had to wait to be paid put them off bidding for public sector contracts. This, together with the Government’s other proposals for making public sector procurement more accessible (see below), should give SMEs greater incentive to get involved in government contracts.

For more information and to download the full consultation, go to www.gov.org.uk

To find out more information about the government tackling late payment, please contact Robert Hillman, Director from Watts’ Bristol office, on 0117 927 5800.

How do you think the Government tackling late payment will affect your business? Let us know your thoughts on Watts’ Twitter page or join the Watts Bulletin group on LinkedIn.

Watts Pocket Handbook

The Watts Bulletin is the technical companion to the Watts Pocket Handbook, the essential guide to property and construction, as used by professionals since 1983.

Watts Bulletin editor: Trevor Rushton.

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