ECA urges government to address payment problems to boost investment

As a government consultation on skills in the construction industry closed last week, the Electrical Contractors' Association (ECA) has said the review “unfortunately fails to tackle the main reason for low investment and productivity – which is fair and prompt payment.”

The government recently urged the construction industry, through the Construction Leadership Council, to "develop an ambitious action plan to address the skills pressures and other constraints that are limiting house building and infrastructure development".

However, ECA director of Business Paul Reeve said: “It’s widely known that engineering is inherently innovative, but while there are innovation hotspots in the wider construction industry, it is hardly endemic. This is mainly due to the prevailing industry approach to payment, which works against investment.  This problem affects building services engineering, and many of the other sectors it works with.

“Skilled staff is definitely one way to achieve better productivity and innovation, but in a business environment where the priority for contractors is to be paid what they are owed, the investment tap is almost entirely turned off.

“Unfortunately, the review does not focus on the main reason for low industry investment and productivity – which is fair and prompt payment. Ending the practice of 'cash retentions' would be an important next step. This would help to boost the balance sheets of smaller businesses in particular, allowing them to invest in the skilled workforce that this consultation is looking for."