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UK should copy Australia on payments

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Rudi Klein: “Those advocating unenforceable payment charters are living in dreamland”

UK: The head of the leading contractors’ group has called on the UK government to follow the example of Western Australian to tackle poor payment performance.

Frustrated with the lack of progress in improving construction payment performance, the Western Australian government has recently announced tough new measures to deal with the problem there.

Insisting that UK construction is the worst performing sector for payment, professor Rudi Klein, CEO of the Specialist Engineering Contractors’ (SEC) Group said that the UK Government and the devolved governments should take note of the developments in Western Australia.

Changes in Australia include the creation of mandatory project bank accounts, tendering bans for those indulging in payment malpractice, the ring-fencing of retention monies and the reduction of payment times to 30 days.

From 30 September 2016 project bank accounts (PBAs) will become mandatory in Western Australia on all state government projects valued between A$1.5m (£860k) and A$100m (£58m).

A new code of conduct for tenderers could enable prospective tenderers to be barred from tendering for payment malpractice.  Consideration is also being given to legislation to fine companies guilty of repetitive payment abuse of their supply chains.

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“Those advocating unenforceable payment charters are living in dreamland.  We need to follow the example of Western Australia if we are serious about helping SMEs to invest in the skills and technologies desperately needed by the industry and its clients,” said professor Klein.

SEC Group has been the leading exponent of PBAs which ensure that progress payments are held in one ring-fenced “pot” to be discharged simultaneously to all supply chain firms. It has also been leading a high profile campaign for statutory protection of cash retentions.

The SEC Group comprises the UK construction industry’s leading trade associations – Plumbing and Heating Contractors’ Alliance, British Constructional Steelwork Association, Electrical Contractors’ Association, Building and Engineering Services Association, Lift and Escalator Industry Association and SELECT (Electrical Contractors’ Association for Scotland).

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