Level playing field needed for SMEs, says Federation of Master Builders
Following the publication of the Government's consultation response to the 'Creating a responsible payment culture' call for evidence, the Federation of Master Builders (FMB) has called on the public sector to lead by example in order to tackle scourge of late payment.
The trade body argues that in order to make things more fair for SMEs, the public sector should offer smaller contracts which would give smaller businesses the chance to be the lead contractor, rather than packaging up a number of small contracts into ‘lots’ which are realistically more likely to attract larger businesses.
Brian Berry, Chief Executive of the Federation of Master Builders, said: “The Government’s acceptance there is a serious imbalance of power between small and large companies when it comes to securing fair payment terms is a step in the right direction. FMB members are telling me that more than three quarters of their payments are late, which is clearly unacceptable. What is needed is a culture change in the construction industry so that late payment is no longer standard practice.
“Fundamentally, to rebalance market power for small to medium-sized companies (SMEs), the public sector should lead by example by breaking up contracts into smaller ‘lots’ and desist from the wholesale ‘bundling’ of contracts. This will help SMEs to act as the principle contractor. By introducing more competition into public sector procurement in this way, payment terms will improve as the balance of power is restored.”