Sector - Finance & Legislation
Late payments cause damage to mental health
A high proportion of electrotechnical employees in Scotland who are using mental health charities have also reported financial issues resulting from late payments in the industry.
According to the Electrical Industry Charity, 2018 witnessed 87% of people using its services as a consequence of financial issues being detrimental to their mental health, while it also recorded that 67% of these individuals worked in SMEs within the industry.
Tessa Ogle, CEO of the Electrical Industry Charity, stated: “The impact of late payments is having an increasingly damaging impact to mental health and wellbeing in the sector. We can no longer look at this as just a monetary issue – the health implications to the sector are significant”.
The Scottish Parliament imposed initiatives to prevent late payments at the beginning of 2018 but the Specialist Engineering Contractors (SEC) Group Scotland have carried out an extensive survey on payment practices in Scottish construction, concluding that not enough is being done.
The findings were backed by the campaigning trade body, SELECT, after they found that 60% of public bodies amend their payment provisions by extending payments cycles, while in the private sector this figure is an even greater 69%.
Moreover, SEC uncovered that only 28% of construction firms were paid by public bodies within 30 days, whereas in the private sector the figure was, again, disappointing with just 24% of firms being aid within a 30 day period.
Alan Wilson, Managing Director of SELECT, stated: “These findings are genuinely shocking and an embarrassment for all concerned. Failure to pay contractors on time creates serious knock-on problems in the economy, as well as being a major contributory factor to the mental strain imposed upon owners and directors of Scotland’s SME businesses, the lifeblood of the Scottish economy”.
These findings come as Kelly Tolhurst MP issues a statement to the House of Commons for England and Wales, detailing the new measures that will enforce businesses being paid within an appropriate period.
Proposals to exact fines against late payers by a Small Business Commissioner, in accordance with the Prompt Payment Code, have been met with acclaim from the The National Federation of Builders (NFB) who stated that they appreciate the commitment of the government in punishing late payers but added that, in effect, little has actually changed.
Richard Beresford, chief executive of the NFB, said: “Despite changes to the Prompt Payment Code, 50,000 businesses fail every year because of late payment. Even the department for business admitted that payment times are getting longer. How many more businesses have to go under before we make late payment a thing of the past?”
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