Deaths could be caused due to poor construction work as a result of late payments to subcontractors, an inquiry led by a Greater Manchester MP has heard.
The issue was highlighted during the late payments hearing chaired by Debbie Abrahams, MP for Oldham East and Saddleworth, last month.
A construction professional claimed that corners had been cut by small contractors because they had not been paid for their work.
Subsequently, this was creating a legacy of ‘sick buildings’ that may put lives at risk because of construction work not being completed properly.
Steve Sutherland of Dortech, a Yorkshire glazing contractor, said: “Some of the buildings I’ve seen being built are shocking, are dangerous, and will eventually result in deaths of people.”
He explained that following the economic downturn contractors desperate for work began quoting low prices, and were attempting to cover their losses by ‘screwing’ smaller contractors brought in to assist with work.
Andy Fisher, North West Regional Secretary for the Union of Construction, Allied Trades and Technicians (UCATT), said the industry was ‘fraught’ with issues of late payments, particularly within glazing companies and the dry-lining industry.
He added: “There are a whole host of things simply because clients hold onto money in order to maximise their profits, resulting in unforeseen consequences.
“From our position that fact smaller contractors – the people we represent – are not being paid, results in conflicts with regards to tribunals.
“Quite often these companies cease trading or go into receivership.”
Photographic evidence produced by Mr Sutherland allegedly showed a building Dortech was contracted to do maintenance work on, where glass windows had been incorrectly fitted by the previous sub-contractor.
He added that because they weren’t being paid, presumably by the main contractor, or that their supplier wasn’t prepared to supply material, they were merely cutting lengths and stitching the glass in.
Late payments has become a growing crisis in recent years – during the 2008 recession around 4,000 businesses failed as a direct result of the matter.
Mrs Abrahams said: “Construction is one of the industries that is really being affected badly by the practice of late payments and it seems now that it could even be putting people’s lives at risk.
“Rather than viewing fair payment terms as part of their corporate social responsibility many large companies are deliberately paying late or extending their pre-agreed payment terms simply because they have the power to do so.”
Mr Sutherland said main contractors were using every trick in the book to claw money back for themselves.
He added: “Every time we have pointed out problems with the standard of work in a building the main contractors have always reacted immediately to put the work right without skimping on the cost.”
Steve Paul, Managing Director of SDP Floor Screeds Ltd, said the withholding of payments amounted to ‘organised crime’.
He added: “They know what they are doing and they are playing with us. They hung me out to dry.”
He told of how he had been owed £1.2million, which sent his company – developed over 25 years – into administration.
The inquiry had been organised to investigate the problem of small and medium enterprises (SMEs) being paid late by larger businesses, after a recent Bacs report revealed more than £30bn is owed to around a million small companies.
Mrs Abrahams is the architect of the Be Fair – Pay on Time campaign, for which she recently won the inaugural Grassroot Diplomat Business Driver award for her efforts in urging top companies to pay their bills promptly to help smaller ones.
Picture courtesy of Raysonho via Creative Commons, with thanks.