Fair Treatment Charter
“If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse, and you say that you are neutral, the mouse will not appreciate your neutrality.” – Desmond Tutu
Specific Goal: Achieve Fair Treatment Of All Specialist Contractors In Regard To Payment
Resources required: You the Specialist Contractor
Actions and timescales
1. Share this message as widely as possible to every Specialist Contractor using #buildgate – immediately and ongoing
2. Report all instances of unfair treatment to me personally and confidentially or share in our exclusively Specialist Contractor LinkedIn Group if you prefer (appropriate evidence must be provided) – timescale immediate and ongoing
3. When tendering for ask about payment terms and remind them that according to Build UK; “Fair and transparent payment practices are essential for a successful construction industry…”
5. Report back what they say either to me personally and confidentially or to our exclusively Specialist Contractor LinkedIn Group if you prefer – immediate and ongoing
6. Refuse to accept unfair payment terms on all future projects, and refuse to work for any company that will not sign up to the Fair Treatment Charter – immediate and ongoing
7. Make suggestions for further action to improve this action plan – immediate and ongoing
Barry J Ashmore
Contact me on 01773 712116 or by email at email@example.com
Our Fair Treatment Charter has been given the formal recognition it deserves by MPs following the All Party Inquiry report released on Friday 12 July 2013.
The report called for the Government to “work with SMEs …to negotiate, for example, a Fair Treatment Charter” in order to help SMEs avoid payment abuse.
The Fair Treatment Charter (FTC) was suggested in April 2013 by our founder Barry Ashmore to the All Party Inquiry, with the aim to level out the playing field for UK Specialist Contractors within the construction industry and prevent late payments and unfair treatment by large contractors.
The FTC was put it forward as an effective solution to the issue that could be implemented almost immediately at virtually no cost to the UK Government. An attractive feature in these economically challenging times.
Abrahams said on the continuation of late payment issues: “Until top CEOs, and their executive board members, make a decision to act ethically in business, and treat our small and medium sized businesses fairly, this problem will persist.
Barry Ashmore welcomed the publication of the report saying that “allowing a culture of late payment and brutal financial treatment to persist unchallenged is just plain wrong, and I am pleased that this report has given formal recognition for the StreetwiseSubbie Fair Treatment Charter”
You can download the full report and a copy of the Fair Treatment Charter, both in PDF format, at the bottom of this page.
Go to our ‘FTC Action Pack’ page to find out how you can do your bit to support the FTC and the #buildfair4all campaign!
The matter of “late payments”, the huge numbers of failing businesses, and the unfair treatment of Specialist Contractors is both a very real, and a very serious issue.
There is a fundamental misconception, in certain quarters, that the issue in the construction industry is that of payers merely paying later than contractually agreed.
That is only one small part of the problem, and payers (i.e. Contractors and larger Specialist Contractors) are using an ever more ruthless array of tactics to pay late, pay less than is fair and/or agreed, and/or to not pay at all.
The vast majority of the 5,500 plus construction related businesses which have been closed due to insolvency over the last few years are Specialist Contractors. Conversely, during the same period, the profitability of Contractors generally has improved.
Logically, one can only conclude that something is fundamentally wrong.
Commentators say “it’s been going on for years”, as if that is in some way justification for this abuse.
Contractors dismiss such matters as hearsay and cynically sign up to the Prompt Payment Code in the certain knowledge that there is no-one to check up on them, and/or chastise them, or even understand the payment process in the industry, let alone come to terms with their array of dirty tricks.
Evidence of payment abuse is provided by our most recent survey of 146 Specialist Contractors.
Of those Specialist Contractors that had worked on public sector projects, only 4.8% were paid in 30 days, whilst the majority of 57% were paid between 30 and 60 days. A substantial number of subbies (10.6%) were paid beyond 90 days.
On private sector projects, only 10.3% of Specialist Contractors were paid in 30 days, whilst the majority (61.4%) were paid between 30 and 60 days. A substantial number of subbies (23.4% were paid between 60 and 90 days, and some 4.8% paid in excess of 90 days.
The Impact Of Supply Chain Payment Abuse
Payment abuse in the construction industry is undermining any attempt to kick start the economy by spending public money on infrastructure. The above evidence highlights the fact that the money is finding its way on to corporate balance sheets rather than passing through the supply chain and in to the wider economy.
Contractors’ ruthless behaviour is ruining lives, causing thousands of Specialist Contractors to not only lose their business but possibly their families and homes too, as the financial and emotional strain takes its toll.
Payment abuse is also affecting the Government’s pledges for more innovation and greener construction.
The firms at the sharp end of innovation in the industry are the Specialist Contractors, but how can they be expected to deliver innovation when they have to constantly deal with the pressures of not getting paid, and their businesses and home lives are falling apart around them?
Current Payment Systems – The Prompt Payment Code – The Mystery Shopper Service
The existing methods for addressing prompt and fair payment throughout the entire supply chain do not work!
Contractors find every way they can to draft or amend contracts so that the Specialist Contractor has little or no chance of receiving fair and prompt payment.
Contractors have developed a myriad of techniques for abusing the payment process and systematically under paying their supply chain.
The overwhelming majority (73.6%) of Specialist Contractors surveyed said they were unable to challenge payment terms. When asked about challenging Contractors on payment terms longer than 30 days, the overwhelming response was that “contractors simply threaten to award the job to another more compliant subcontractor.”
Similarly, when asked whether or not existing remedies for getting paid the correct amount on time, (such as the Construction Act, adjudication or litigation) were working, the overwhelming majority said that they were not, and that they needed changing.
The Prompt Payment Code, and “naming and shaming” threats are on the face of it helpful.
However, I have personally reported 2 very specific instances of payment abuse, by the same firm, on the same publicly funded project, to the Government’s Mystery Shopper Service. After several weeks of “investigation” by BIS, and relentless pressure on Michael Fallon and Stephen Allott to answer my emails, I am finally informed that the matter is, and I quote “a case of disputed invoices rather than late payment per se”.
Recommendations on Tackling Supply Chain Payment Abuse
The situation will not get better without some sort of effective intervention. This need not be massively costly or take an age to bring about.
On behalf of StreetwiseSubbie and the Nationwide Alliance of Specialist Contractors, I have produced a Fair Treatment Charter. This is a simple set of protocols, which if adopted throughout the industry would achieve a much fairer, more open and honest approach to payment throughout the entire supply chain.
It would be a simple matter to make the Fair Treatment Charter applicable to the contractual relationship between every party in publicly funded contracts, and to amend the Construction Act to make them applicable to every “Construction Contract”.
The Fair Treatment Charter is available to download by entering your details below
Barry J Ashmore April 2013