Don’t miss opportunities with Autumn Statement construction spending, says ECA
The Electrical Contractors’ Association (ECA) has welcomed Chancellor George Osborne’s plans to increase infrastructure and housebuild spending. However, it warns against missing out on opportunities to reform construction contracts by tackling late payment and a looming skills crisis in the craft sector.ECA group CEO Steve Bratt said, ‘The government’s National Infrastructure Plan represents a solid investment for the UK economy and the extra £400m for housebuilding is most welcome. Every £1 spent on construction leads to an increase in GDP of £2.84 and stimulates growth elsewhere in the economy worth £1.84, so a strategic increase in construction should be good news all round.’
However, Bratt warned that the investments will not deliver the desired boost to the economy if contracts do not ensure this cash reaches subcontractors and SMEs. In a survey earlier this year of the ECA’s membership – 80 per cent of whom are SMEs – 75 per cent of respondents said that late payment was the single biggest factor holding back their growth.
Bratt added, ‘We won’t see any benefit if firms are forced out of business because of cashflow problems arising from late payment.’
Bratt said that the central government contracts arising from the Plan could showcase best payment practice and set an example to the industry.
‘Central government contracts require main contractors to pay their subcontractors within 30 days, but the same requirement doesn’t exist across the public sector as a whole, or to the private sector at all. The ECA would like to see this protection extended to all areas of public sector procurement. Main contractors working on projects endorsed by government shouldn’t be allowed to hold back payment beyond 30 days – smaller firms simply can’t wait. If they aren’t paid on time, businesses will fail and jobs will be lost, undermining the Treasury’s investment,’ said Bratt.
‘To stimulate economic growth, companies need business confidence, which is low right now. Promises of new project funding do not equate to solid guarantees of timely payment,’ he added.
Bratt also insisted that the government should not miss out on building a skills legacy. ‘Projects like Crossrail, where just three per cent of workers will be apprentices, are missed opportunities. Tying training requirements to procurement would increase the skills base getting young people into meaningful apprenticeships with industry recognised outcomes and in turn, helping UK plc to grow and prosper.’