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Payment Group Minutes

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Payment Group Minutes MINUTES Meeting: Payment Group Date: Wednesday 30 September 2015 Time: 10:00am – 12:30pm Location: Balfour Beatty, 130 Wilton Road, London, SW1V 1LQ Chairman: Martin Chown Attendees Martin Chown Chairman Carole Bailey FIS John Jolly Vice Chairman Dave Maginnis NFRC Martin Mather Bouygues UK Ceri Humphrey VolkerWessels UK Philip Ball BDA Jamie McKechnie Wates Group Martin Burton B&ES Graham Dundas Willmott Dixon Mike O’Connor Carillion Construction Alastair Maciver CONSTRUCT Steve Wood FPS Jo Fautley Build UK Apologies Narinder Shergill Skanska UK Naomi Connell VolkerWessels UK 1. Welcome & Apologies The Chairman welcomed everyone to the first meeting of the Build UK Payment Group and members introduced themselves. It was noted that the apologies that had been received would be recorded in the minutes. 2. The Role of the Payment Group Jo Fautley (Build UK) gave an overview of Build UK and the Payment Group: Build UK had been launched on 1 September following the merger of NSCC and UKCG Build UK brought together 27 Main Contractors and 40 Trade Associations representing 11,500 Specialist Contractors Build UK had published an Action Plan setting out the following initial priorities: o The image of construction o The industry’s skills needs o Effective pre-qualification o Health and safety performance o Fair payment practices Leadership Groups had been established on each of the issues made up of an appropriate balance of Main and Specialist Contractors with relevant knowledge and experience The Payment Group would be asked to set the high level objectives on the issue of fair payment practices and be responsible for their outcomes All the Leadership Groups would report directly to the Contractor and Trade Association Forums which would agree the way forward for Build UK. The Payment Group considered the following high level position on payment which had been set out in the Action Plan: 1 MINUTES Fair and transparent payment practices are essential for a successful construction industry with a strong and sustainable supply chain capable of meeting its clients’ needs. Determining appropriate business models that deliver outstanding performance and productivity will enable businesses of all sizes to confidently deliver an excellent level of service each and every time and will result in first-class projects. Build UK will bring together the contracting supply chain to consider what best payment practice in construction looks like and present appropriate business models that will result in a thriving construction industry capable of delivering the necessary infrastructure and built environment across the UK. It was recognised that payment had been an issue for the industry for many years and there had been numerous initiatives to try to tackle it. The challenge for Build UK was to avoid becoming another ‘talking shop’ and change custom and practice so that all businesses within the supply chain got paid on time. Client involvement would be key to driving best practice but the supply chain had to get its own house in order as well. 3. Defining Fair Payment – The Current Position The Chairman directed members to the Construction Supply Chain Payment Charter which had been distributed with the agenda for the meeting. It was noted that the Payment Charter had been published in 2014 as part of the Construction 2025 strategy and was supported by the Construction Leadership Council. Companies had been able to register their interest in becoming a signatory over the summer and it was expected that a full list of signatories would be published after the first meeting of the new Construction Leadership Council in October. Martin Mather (Bouygues UK) queried the need for the Payment Charter when the Prompt Payment Code had recently been strengthened to introduce maximum payment terms of 60 days with a 30-day norm for all signatories. The Payment Group recognised that the Payment Charter was construction specific and went beyond the more generic requirements of the Prompt Payment Code to set out best payment practice for construction. There was a discussion around the scope of the Payment Charter and whether it applied to materials suppliers where payment terms varied widely and it was noted that the introduction to the Payment Charter referred to ‘construction contracts’. The Payment Group considered each of the commitments within the Payment Charter and felt that Build UK should consider proposing the following minor amendments to the wording: In commitment 3), clarify that the payment terms refer to ‘construction contracts’ only, for example by inserting the word ‘contracting’ before supply chain In commitment 9), amend the wording to read: ‘We will use Project Bank Accounts on central Government contracts where specified by the client.’ to reflect the fact that a signatory would generally not have control over the use of Project Bank Accounts. The Chairman requested that members send any other minor comments on the Payment Charter to Jo Fautley (Build UK) by Friday 9 October. Build UK would then consult with the Construction Leadership Council regarding the wording of the Payment Charter. The Payment Group agreed that, as NSCC and UKCG both publicly supported the Payment Charter in principle, it should be recommended to Build UK members that Build UK confirm its support for the principles of the Payment Charter. 2 MINUTES Action Payment Group members to submit any other minor comments on the Payment Charter by Friday 9 October. Build UK to consult with the Construction Leadership Council regarding the wording of the Payment Charter. Build UK to recommend to Contractor and Trade Association Forums that Build UK confirms it support for the principles of the Payment Charter. 4. New Statutory Requirements Jo Fautley (Build UK) outlined the new statutory reporting requirements on payment practices: It had been confirmed in March 2015 that large companies would be required to report on their payment practices from April 2016 and Government was currently developing the secondary legislation The definition of ‘large company’ was as per the Companies Act and companies would be required to report if they satisfied two or more of the following conditions: o Turnover - £25.9 million or more o Balance Sheet Total – £12.9 million or more o Number of employees – 250 or more Companies would be required to report on a range of metrics including standard payment terms; average time taken to pay; proportion of invoices paid beyond agreed terms; and proportion of invoices paid in 30 days or less, between 31 to 60 days, and over 60 days Reporting would be required on a half-yearly basis and there would be a single website where all reports would be published. It was noted that companies would be required to report on their payments to all suppliers, not just construction, which could undermine the value of the data to the supply chain. Clear guidance was needed to ensure that companies were reporting on the same basis and the data was comparable. The Payment Group agreed that Build UK should arrange a meeting with BIS to discuss the new reporting requirements and then publish guidance for members. It also agreed that it should be recommended to Build UK members that Build UK benchmark its members that are required to report on their payment practices. Action Build UK to arrange meeting with BIS to discuss new reporting requirements on payment. Build UK to publish guidance for members on new reporting requirements. Build UK to recommend to Contractor and Trade Association Forums that Build UK benchmarks its members that are required to report on their payment practices. 5. Next Steps The Payment Group agreed the following outcomes to present to Build UK members: 1. Given that NSCC and UKCG both publicly supported the Construction Supply Chain Payment Charter in principle, Build UK to confirm its support for the principles of the Charter 2. Build UK to consult with the Construction Leadership Council regarding the wording of the Construction Supply Chain Payment Charter 3 MINUTES 3. Build UK to arrange a meeting with BIS to discuss the new statutory requirements on large companies to report on their payment practices and then publish guidance for members 4. Build UK to benchmark its members that are required to report on their payment practices from April 2016. It was confirmed that the proposed outcomes would be considered at the first meetings of the Contractor and Trade Association Forums on 21 October 2015. 6. Any Other Business a) Payment of Staff Further to a query from Mike O’Connor (Carillion Construction), it was felt that fair payment of the industry’s workforce was outside the scope of the Payment Group and Jo Fautley (Build UK) would confirm whether this would be picked up by another Leadership Group. Action Build UK to confirm whether payment of the industry’s workforce would be picked up by one of the Leadership Groups. b) Future Meetings The Chairman confirmed that dates for Payment Group meetings had been set for 2016 and members were invited to put these in their diaries. Future Meetings Tuesday 26 January 2016 Thursday 21 April 2016 Thursday 7 July 2016 Thursday 20 October 2016 All meetings will be held from 10:00am – 12:30pm in London. 4 .
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