Last week, we reported on Cabinet Office proposals to ban companies with poor payment practices from major government projects. They are part of a concerted push by the government to introduce measures to level the playing field for smaller businesses bidding to win government contracts and to bring in fairer payment practices. Other new rules, the consequences of which are only emerging now, are forcing firms with a turnover of more than £36m to report their payment term performance. 

Let’s be clear: late payment is the bane of our industry and it needs to be stamped out. Carillion, a signatory to the Prompt Payment Code, was widely known for poor payment practices, with the company’s former finance director Emma Mercer conceding 5% of suppliers were paid after 120 days when she faced MPs running an inquiry into the company’s collapse.

Still, there is the unignorable feeling that the government is playing to the gallery, responding to the public mood as jobs are lost and firms go under in the wake of Carillion’s collapse. Contractors, it seems, are fair game.

Everyone knew that paying the supply chain after 120 days and charging them for the privilege of being paid earlier was a racket. Folk took their chances, right, because they needed the work? Including the government, which, as a client, let them get away with it. Well, until January, that is, when suddenly it couldn’t. You can’t help but think the government thought up its plans to close the stable door when it finally realised that the horse had bolted. 

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