In a letter to the industry, the Construction Leadership Council (CLC) has urged construction businesses to continue to pay in accordance with agreed contractual terms
In response to managing the impact of COVID-19, the CLC says firms should not be threatening to invoke penalty or other contractual clauses, when it should be the priority of all clients and firms to sustain the industry.
The CLC said it was “increasingly concerned” about the management of payment in the supply chain, and the risk that clients and firms will seek to invoke contractual clauses to the detriment of other firms.
CLC said: “We are clear that all construction businesses should continue to pay in accordance with agreed contractual terms. Similarly, firms should not be threatening to invoke penalty or other contractual clauses, when it should be the priority of all clients and firms to sustain the industry.
“Our actions at this time will be remembered. All firms should think hard about how their reputation could be damaged by not doing the right thing.”
In its letter to the Prime Minister, CLC outlined the importance of maintaining cash flow to ensure the financial health of the construction industry. This applied to all businesses in the sector, including those in the materials and products distribution supply chain.
CLC wrote: “As a result, every business, large and small, has a critical role in the making sure that cash continues to flow throughout the industry.
“However, our Construction Industry Task Force colleagues have brought to our attention that there are number of businesses that have chosen to unilaterally delay payment or extend credit terms. We do not believe this is acceptable or appropriate – particularly at this time of great stress.”
‘Our common enemy is COVID-19’
Many organisations have taken steps to support their supply chains through their collaborative administration of contracts. Government implemented PN 02/20, under which public-sector clients will continue to pay suppliers at risk due to COVID-19 until at least the end of June 2020.
The letter added: “Our common enemy is COVID-19, and we need to unite, and work collaboratively to resolve shared problems. We owe it to our sector and the country to take all steps necessary to ensure that the industry is in good health to support the recovery, when it comes.
“It is everyone’s responsibility to keep money moving in the sector and vital that all businesses play their part by maintaining payment and by managing contracts responsibly.
The Construction Industry Task Force has been developed a number of initiatives:
- A letter to the PM, summarising urgent industry support needs.
- Developing Site Operating Procedures based on Public Health England guidance.
- Industry-tailored guidance for the Coronavirus Job Retention Scheme and self-employed worker scheme.
- Supporting firms to access to Government-backed loans schemes for business.
- Organising a call for industry leaders with the Minister for Construction.
- Producing a daily newsletter for the industry.
- Issuing good practice guidance on temporary suspensions of site activity.