SECURITY OF PAYMENT FOR SUB-CONTRACTORS– IMPROVEMENTS FOR ENGLAND FROM INTERNATIONAL PRACTICES
LOUISE HALL *
Commercial Lead at Highways England on the Lower Thames Crossing project.
This paper is based on a highly commended entry in the Society of Construction Law's Hudson essay competition 2018 which has been published by the SCL at www.scl.org.uk. This version is published here with the permission of the author and the SCL.
Cashflow is of vital importance to sub-contractors within the construction industry. However, there persists a problem with ensuring they are paid fairly, that is to say, in full and on time. Whilst the issue is complex and multifaceted, three key themes arise: the relationship between the employer and the sub-contractor; an attrition of cashflow; and insolvency risk. This paper evaluates the measures implemented to deal with these issues in England, and draws a comparison with the provisions in a global range of civil and common law jurisdictions, in order to make recommendations on how the English situation can be improved.
Sub-contractors play a vital part in the UK construction industry, with a strong reliance placed upon their skills and labour to deliver a large proportion of the work. The demographic of the UK industry demonstrates the scale of the situation, with the small and medium enterprises (SMEs) who usually act as sub-contractors making up 99 per cent of the 314,590 companies in construction contracting. 1 However, despite longstanding recognition of the significant contribution of sub-contractors, there remains a problem with ensuring they are paid fairly, that is to say, in full and on time. 2
* Email: [email protected]
1 Haynes, F, “Construction Statistics: Number 19, 2018 Edition”, (Office for National Statistics, 2018) page 6.
2 Department for Business Innovation and Skills, “Building a Responsible Payment Culture”, (Crown, 2014), page 4.
Pt 1] Security of Payment for Sub-Contractors – Improvements