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Construction strategy targets late payment

Business minister Michael Fallon said last week that a Fair Payment Charter would be the first priority for a new industrial strategy for the construction industry.

The charter will build on the government’s Prompt Payment Code which calls for 30 day payment terms to be applied on all taxpayer funded projects.

Fallon said the charter would be ready by the end of the year and that he would “work hard” to get it adopted on major projects.

But he stopped short of saying that the government would enforce the charter. Instead he said the industry should “take ownership” of it.

The lead, he said, would come from the newly formed Construction Leadership Council to be chaired by Network Rail chief executive Sir David Higgins.

Michael Fallon

Fallon: Up to industry to embrace construction strategy

 

The council is charged with ensuring the commitments made in the government’s Construction 20205 industrial strategy are delivered (see box).

The new strategy for construction has been produced by the government with industry backing.

The council’s members are a mix of government, clients and contractors, consultants and suppliers.

“I will work hard to get it adopted on major projects and I hope that the members of the Council will champion it on their projects,” he said.

“This is not something that can be legislated or done by coercion. It has to be something the industry owns.”
Chief construction advisor Peter Hansford agreed.

“There is currently a significant problem with cash flow in the construction industry,” he said.

“The government has championed a number of initiatives aimed at getting cash more quickly into the supply chain, but it is clear that more needs to be done.

“We are addressing this as an area of priority,” he said. “Our commitment is to address access to finance and payment practices.”

The charter will be developed by the Institute of Credit Management and is one of a number of commitments made in the strategy.

The strategy states that it aims to provide the basis for the construction industry to “exploit its strengths” in the global market and sets ambitious targets for boosting efficiency.

These include a 33% reduction in construction cost and whole life cost of assets and a 50% reduction in delivery time.

Fallon said that the targets were “stretching and ambitious” but “right for an industry seeking to be at the heart of the UK economy”.

Challenged on why these targets will be hit when others in the past have been missed or ignored, Fallon said it was a “commitment issue”.

“This is not a list of nice things to happen,” he said. “It’s a commitment on both sides on what has to be done together.

“Through the council we will make sure that happens, and that hasn’t happened before,” he said.

 

A ‘very important milestone’

Business minister Michael Fallon described the launch of the Construction 2025 industrial strategy as a “very important milestone” for construction.

It sets out how the government plans to build a collaborative, strategic partnership with the industry as a key sector for driving the UK economy forward. Similar strategies have already been produced for the aerospace and automotive industry.

“So far there has been full consensus across the political spectrum for the industrial strategies, and there has been specific support in the aerospace and automotive sectors. I hope it will be the case in construction too,” he said.

Fallon said that the strategies work because there is buy-in at senior levels of industry and government.

“It is a true collaboration between government and industry at the most senior level,” he said.

“But we have to be ambitious,” he cautioned.

“This is an industry that ought to be able to punch its weight with government.

“So I am delighted to see the scale of the ambition.”

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