UK: The Specialist Engineering Contractors’ (SEC) Group has called for “urgent action” to tighten payment security in the the light of the latest UK insolvency statistics.
According to latest figures, total underlying company insolvencies increased in Q1 2019 by 6.3% compared to the previous quarter, and 5.1% compared to the same quarter in 2018.
Over the 12 months ending in the first quarter of this year there were 3,013 company insolvencies in the industry – the highest for any sector in the UK.
“Insolvencies in the industry are running at their highest rate since the recession. Whilst some can be put down to the continuing fall-out from Carillion’s demise, many are the result of worsening cashflow and widespread payment abuse,” commented SEC Group’s CEO, Professor Rudi Klein.
“I’m disappointed that, after almost 18 months following the Carillion collapse, we are still waiting for decisive action on payment,” he added.
SEC Group has been promoting two Private Members’ Bills in the House of Commons to improve construction payment security – the Construction (Retention Deposit Schemes) Bill laid by Waveney MP Peter Aldous and the Public Sector Supply Chains (Project Bank Accounts) Bill laid by Debbie Abrahams, MP for Oldham and Saddleworth.
The Aldous Bill will ensure that retention monies are protected in a ring-fenced scheme. The Abrahams Bill required that all payments on public sector projects would be made to the supply chain directly from one ring-fenced account (without the monies having to cascade through the different layers of contracting).
SEC Group intends to pursue these measures through to the next session of Parliament.