Almost 63% of engineering services firms were not paid within 30 days by public sector bodies during the second quarter of this year, according to new survey findings from the ECA, the Building Engineering Services Association (BESA), and SELECT.
The figures represent a decline in prompt payment performance on the first quarter of the year, when 55% of businesses were not paid within 30 days by public sector bodies such as local authorities and NHS trusts.
In many cases, this directly contravenes government legislation on prompt public sector payment, known as the Public Contracts Regulations 2015.
In addition, four in 10 firms (39%) said more than 3% of their turnover is being held in retentions by firms up the supply chain.
Despite the challenging payment climate, turnover among respondents remained strong, with more than eight in 10 (81%) finding turnover increased or stayed the same in Q2, compared to Q1. Looking ahead to Q3, 87% of businesses expect turnover to rise, or remain steady.
ECA CEO Steve Bratt commented: “The engineering services sector continues to show resilience despite the ongoing challenges of late payment and cash retentions, and the increasing challenge of rising material and labour costs.
“With public sector support – including prompt payment – our sector can deliver key infrastructure projects and provide skilled technical employment. This would support of government objectives for growth and delivering whole-life asset value to the UK economy.”
The sector-wideBuilding Engineering Business Survey, sponsored by Scolmore, received 318 responses from SELECT, BESA and ECA members during July.
The trade bodies are currently working with construction industry stakeholders and government to secure a sector deal which will enhance the built environment, while supporting SMEs throughout the supply chain.