The claim was made during a parliamentary hearing by the Business, Energy and Industrial Strategy Committee, which is examining the issue of small businesses and productivity.
Following a question from Labour MP Rachel Reeves, who chairs the committee, about which major contractors subcontractors would not work for because of problems with poor payment, Tony Davis, managing director of Essex-based AMD Electrical cited the example of Kier.
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He said: “I won’t work for Kier at all because we talk a lot in the electrical industry and we have meetings in the Electrical Contractors Association (ECA) quite frequently and poor paying builders are quite often bandied around in the meeting. We stay away from players that have a reputation and Kier is one of them.”
It was recently revealed as part of a league table published by Build UK that Kier, along with Balfour Beatty and Vinci, takes an average of more than 50 days to pay invoices.
Kier and Balfour take an average of 54 days, while Vinci takes 52 days. Together with Murphy Group (66 days) and Engie (61 days), they are the five slowest payers among the Build UK members who have published details of their payment performance.
Davis said that even if a company offered standard payment terms, the time it actually took to pay could vary considerably. “It is not what is written on paper, it is what happens in practice and what happens in practice is the same excuses all the time: why they don’t want to pay you on 30 days, why they want stretch it out to 45 days. It could be something as basic as the wrong date on your invoice, or you valued it to a day, say the 28th of the month and they wanted it valued to the 30th of the month. These are the pathetic answers that we get back all the time,” he said.
Davis appeared in front of the committee alongside Paul Antino, managing director of NRT Building Services Group, Tim Hopkinson, director of ductwork contractor E Poppleton, and Martin Burton, contracts director at building services engineers Arnold James.
Earlier in the session, Burton appeared to defend Kier, commenting that it was “one of the more amenable contractors”.
But all four appeared to agree that in general, late payment was holding back productivity and investment in the sector.
Hopkinson said: “In essence it [late payment] stops our ability to grow. That means our inability to invest in apprenticeships and training, and technology. We as a supply chain and SMEs fall behind the main contractors that are leading the way in the use of technology – we are unable to keep pace and that is a fundamental problem of being down the food chain in the construction industry. And that affects the industry as a whole. It becomes less productive and is unable to continue to invest in infrastructure.”
Davis added that in his estimation, the problem of late payment was getting worse. He said: “I am at the stage in my business where I either stay where I am or I make the next step, the next step being employing more people and going for bigger contracts. I have a business partner and we have many discussions about whether we bother to invest in more apprentices and more employees because the situation in my opinion is getting worse from late payments.”
Meanwhile, Hopkinson called for legislation backed up by more effective regulation. He said: “Whether it is retentions or late payment or undervaluation, at the end of the the day it is working capital that the tier ones want and we need to run our businesses. We need government to legislate but not only to legislate but thereafter with someone like the Small Business Commissioner to police. Unless it is policed and enforced then it will continue to be a challenging industry where we struggle to invest in growth, apprenticeships and training.”
In response to the criticism from Davis, a Kier spokesperson said: “Our payment terms and timing of payments to our supply chain partners remains a very important area of focus for us and a responsibility we take very seriously. Kier uses an early payment process which ensures our supply chain can be paid at around 21 days with around 60% of transactions using this process. We believe that providing our suppliers with access to our early payment facility gives them the flexibility to manage their cashflows as they feel fit and to receive payment in advance of the contractual terms.”
Later in the same session, minister for small business Kelly Tolhurst promised that companies signed up to the Prompt Payment Code would be investigated if they did not stick to its terms.
“We will now investigate all complaints against signatories of the code and there will be regular reviews of signatories to the code,” she said.
