Thursday 24th April, 2014

A new Construction Supply Chain Payment Charter that sets out payment terms of 30 days has been agreed by the Construction Leadership Council (CLC), the body set up to deliver the UK Government’s industrial strategy for construction.

The Charter sets out 11 “Fair Payment Commitments”. These include a commitment to reduce payment terms to a supply chain to 30 days from January 2018.

The Charter also sets out stages before this: terms of 45 days from June 2015, and 60 days with immediate effect.

Other commitments made in the Charter include not withholding cash retentions, not delaying or withholding payment, and making payments electronically.

When an organisation signs-up to the Charter it will agree to the fair payment commitments in its dealings with its supply chain; which will be monitored against a set of agreed key performance indicators (KPIs) for compliance purposes. It will also need to consider the performance of its supply chain against those KPIs when awarding contracts.

Philip King, CEO of the Institute of Credit Management, will now lead work on the development of monitoring arrangements for the commitments made by signatories to the Charter.

Companies represented on the Construction Leadership Council that have agreed to sign up to the Charter are: Barratt Developments, Berkeley Group, British Land, Imtech UK, Kier, Laing O'Rourke, Skanska, Stanford Industrial Concrete Flooring and Stepnell.

Peter Hansford, the UK Government’s Chief Construction Advisor, said: "This Charter signifies the Construction Leadership Council’s commitment to small and medium-sized business, and the important role they play in the construction industry."

Anna Stewart, Chief Executive, Laing O'Rourke and Mike Putnam, Chief Executive, Skanska said:

"The work undertaken on the Supply Chain Charter has been an important part of what the Construction Leadership Council hopes to achieve by 2025. By publishing the Charter, the Council is setting out a clear position, and is encouraging others to follow."