Public Sector: Contractors

House of Lords written question – answered at on 27 November 2012.

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Photo of Lord Cotter Lord Cotter Liberal Democrat

To ask Her Majesty's Government what steps they will take to determine whether sub-contractors of public sector construction contracts are paid by their contractors in a full and timely manner; and whether those steps will include unannounced inspections.

Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Lords Spokesperson (Cabinet Office), Lord in Waiting (HM Household) (Whip)

After May 2010 this Government introduced extensive reforms of public procurement to streamline the process and to create a more level playing field where SMEs can more easily compete for and win business. As part of this work we have instructed departments to monitor prime contractors' performance against the 30-day commitment to pay subcontractors as part of the contract management process. We have also introduced a mystery shopper service which allows us to investigate instances of late payment and we publish these cases on our website.

I am pleased to say that on 13 November, the National Specialist Contractors Council paid tribute to the work done by the Government in ensuring prompt payment in construction by naming the Minister for the Cabinet Office and Paymaster General, my right honourable friend Mr Maude, as one of its fair payment champions.

This recognises the effectiveness of the steps we are taking to ensure sub-contractors are paid on time, such as using project bank accounts to make direct payments to firms down to tier 3 of its supply chains. Where project bank accounts are not used, we specify in contract terms that contractors should pay their subcontractors within 30 days, in line with the Government's prompt payment code.

We believe that this combination of spreading good practice and selectively targeting those instances of poor payment performance is the most productive use of resource and the least burdensome for the majority of suppliers.

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