Government proposals should enable SMEs to access government and public-sector contracts

The National Federation of Builders (NFB) has welcomed a package of government proposals to remove barriers to SMEs winning more government and public-sector contracts.

The proposals include plans to ban late payers from government contracts.

The government would like to award 33% of contracts to SMEs by 2022 but late payment is a severe deterrent to SMEs.

In April 2017, the Zurich SME Risk Index estimated that SMEs are owed £44.6 billion in late payments. Years before the liquidation of Carillion, NFB members had been reducing their exposure to Carillion and to other main contractors who had a reputation as poor payers.

Richard Beresford, chief executive of the NFB, said: “Taxpayers deserve to see the best value bids build their communities but there are barriers that prevent capable SMEs and regional contractors from even competing. Banning late payers is a common-sense proposal that means companies that push their suppliers into administration will no longer be rewarded by the government with more work.”

For years, the NFB has been asking the government to remove barriers for SMEs and to enforce existing legislation that would improve payment times. The liquidation of Carillion on January 15, 2018 has crystallised issues, such as late payment and how contracts are awarded, that the government and the construction industry agree on and can work quickly to change.