Holyrood urged to adopt five-point plan to support construction industry

Ian Honeyman

THE Construction Industry Coronavirus (CICV) Forum has developed a five-point plan to help construction contractors cope with the Covid-19 crisis.

The organisation, which comprises 23 trade and professional bodies as well as scores of companies and individuals, has written to Kevin Stewart MSP, the Scottish Government’s minister for local government, housing and planning.

The CICV stated that the ‘urgency’ of the appeal was highlighted by the fate of Central Building Contractors (Glasgow), which went into administration recently, making 148 staff redundant.

Len Bunton, head of the CICV Forum clients sub-group said, “Even before the sudden shutdown of the construction industry in Scotland, the sector was experiencing extreme difficulties in relation to cashflow and payment. Urgent attention to payment cash flow and fairness is now needed by the public and private sector in Scotland.”

The letter asks the Scottish Government to implement the following five key points:

  • Agreement by public sector procurers on all project costs at March 31, including resolution of disputes, and payment within 14 days.
  • Public sector procurers to consider release of all or part of retentions.
  • Introduction of 14-day payment period when construction recommences.
  • Introduction of Project Bank Accounts (PBAs) when construction recommences.
  • Lowering PBA threshold on public sector procurement to £250,000.

Ian Honeyman, commercial director of Forum member the Scottish Building Federation, added, “From the end of March, most contractors and the supply chain in Scotland have been unable to generate work in progress on sites. This situation will continue for a significant period beyond the date of a return to operational sites. The Forum has produced realistic recommendations on improving cash flow and if there was co-ordination on these matters between local authorities, Scottish Government procurement departments and the Scottish Futures Trust, this would give a significant lead to the Industry on to how to sensibly manage a way through this crisis.”

The Forum’s plea follows a survey which showed that cash flow has ‘completely dried up’ for nearly 80% of firms in the construction industry in Scotland and that close to two thirds of businesses are being hit by late payments.

Fiona Hodgson, chief executive of the Scottish and Northern Ireland Plumbing Employers’ Federation (SNIPEF) commented, “Retentions are something we have to look closely at in the future, but even a temporary release of public sector contract retentions would generate significant cash flow throughout the industry.”