Carillion is believed to have moved its payment limit from 65 days to 120 days as part of its Early Payment Facility which, the contractor says, supports the Government’s Supply Chain Finance Initiative, announced by Prime Minister David Cameron in October. Under Carillion’s new terms, subcontractors who want to be paid before the four month deadline will have to pay a charge, set out on a sliding scale, depending on how quickly they would like the cash. However, the new Late Payment of Commercial Debts Regulations 2013, which came into force on 16 March, require businesses to pay their suppliers within 60 days, with interest being charged on any late payments. The NSCC believes that the implementation of the 120 day payment terms by tier one contractors is “grossly unfair” and has written to the Government as part of its ongoing Fair Payment campaign. A spokesperson said: “Given the bargaining position of tier one contractors compared with the majority of business in their supply chains, it is difficult for specialist contractors to negotiate on payment terms and they have little or no practical choice other than to accept what is proposed or they risk losing the work. “Cash flow is of vital importance to the specialist sector and a payment cycle of 120 days is very onerous even with the opportunity, but no guarantee, of earlier payment.”
The National Specialist Contractors Council (NSCC) has reacted with dismay to reports that Carillion is extending its maximum payment terms for suppliers to 120 days.
Travis Perkins blames rain for decline in construction activity
Builders’ merchant Travis Perkins is the latest construction business to cite heavy rain as a primary cause of the industry’s current woes.
There has been much comment about how the 5.2% fall in construction output in the second quarter of 2012 has resulted in an overall 0.7% fall in the UK’s GDP.
The over-riding impression is that the fall in construction output is primarily a result of public spending cuts. The impact of the record rainfall has evaded analysis but anecdotal evidence increasingly suggests that the weather impact could be a primary cause, meaning that construction activity has only been postponed rather than eliminated.
Travis Perkins chief executive Geoff Cooper said this morning: “Whilst weather patterns normally average themselves out over any trading period, it has been difficult to ignore the impact on the results of the first half trading of the wettest three months since records began. This has inhibited construction activity and particularly constrained turnover in our heavy-side related businesses in a market already struggling to recover to more normal levels.”
Earlier this month block paving producer Marshalls attributed £10m of lost sales to the weather, prompting a £7m corporate restructuring.
Travis Perkins’ interim results, out today, show that revenue was down 0.7% on a like-for-like basisat £2,412m. Adjusted profit before tax was up 7.3% to £137m.
New GDP figures from the Office for National Statistics show that the UK economy and its construction industry returned to recession with a fall in the first quarter of 2012 of 0.2% for the economy as a whole and 3% for construction.
With a 5% contract in the construction industry in the past six months, the industry has lost the gains that it made in 2011.
Commenting on these figures, Construction Products Association economics director Noble Francis said: “Given the sharp effects of public sector spending cuts over the past 12 months it is unsurprising to see that construction returned to recession in the first quarter with a fall of 3% following the 0.2% fall in Q4. Furthermore, with new orders for construction falling 14% in 2011, the industry is likely to endure further falls near-term. Our latest forecasts for construction anticipate that the industry will fall considerably this year and remain flat in 2013, severely delaying recovery for the economy as a whole.
UK services sector accelerates in March, says survey
Activity in the UK’s services sector picked up in March, a survey suggests, with more jobs being created.
The Purchasing Managers’ Index (PMI) rose to 55.3 from 53.8 in February. Levels above 50 indicate expansion.
It follows similarly strong March surveys from the manufacturing and construction sectors.
The data points to first-quarter UK economic growth of 0.5%, according to Chris Williamson, chief economist at Markit, which produces the surveys.
Hotels on campus’ as universities build up their image
Universities are spending millions on new buildings as they compete to attract students – including campus hotels, an overseas student village and better bedrooms, says a survey.
Building firm Wates says 79% of them have construction plans costing more than £5m scheduled for next year.
Improved facilities for overseas and postgraduate students are planned by two-thirds of universities, it reports. Ian Vickers of Wates said higher fees meant higher demands from students.
The shake-up in higher education funding means that universities face increasing competition – with the financial viability of degree courses depending more than ever on their ability to recruit students.
It means that universities are having to pay more attention than ever to the so-called “student experience”.