Dortech chairman gives evidence on late payments

STEVE Sutherland, chairman of Yorkshire glazing contractor Dortech, has appeared before MPs to give evidence about his company’s experience of late payments in the construction industry.

Dortech made headlines last year after the Huddersfield-based company ended a 13-year relationship with construction giant Balfour Beatty in protest at payment policies.

At the time Mr Sutherland said Dortech was sacrificing £5m of turnover – more than 40% – as the company made the stance.

The decision followed Mr Sutherland’s claim that Balfour Beatty had delayed payments for jobs completed, resulting in Dortech making a loss on a series of projects.

Now Mr Sutherland has appeared at the Evidence Session on Late Payments to SMEs to give his own experiences to MPs on the matter.  The session was chaired by Debbie Abrahams, MP for Oldham East and Saddleworth and was attended by six others.

Following the hearing, MPs will meet to study the evidence and will produce an inquiry document with their recommendations for policy changes on late payments.

He gave evidence alongside Steve Paul, managing director of SDP Floor Screeds, whose business went into administration last August. Mr Paul claimed the move was primarily triggered by non or late payments from main contractors and from Mansell a subsidiary of Balfour Beatty.

Speaking after the hearing, Mr Sutherland said: “I did my best to emphasise that Sir Michael Lathams’s original intent with the Construction Act for fast low cost resolution of disputes has been hijacked with the involvement of the legal profession, with potentially high, non recoverable costs significantly reducing the commercial viability of pursuing low value (below £5,000) claims.

“I also emphasised that despite recent changes to the Construction Act, the Government’s Trade and Industry report of 2002 ‘The use of retentions in the UK Construction Industry’ which concluded that it would be in all parties interests for retentions to ‘disappear’, late or extended payment of retentions remained an issue for both sub contractors and main contractors.

“I also pointed out that the current practise of lowest price wins in the construction industry, driven by the poor economic climate, was also driving standards down to below acceptable levels, and provided evidence of two projects where this was the case.

“I also named a number of other construction companies that Dortech works with, who in our opinion had refused to lower their standards and still paid and operated to the highest standard.”

Balfour Beatty, HSBC, Barclays and WPP were represented at the session and were asked to account for their payment policies and their payment record to their suppliers.

When Mr Sutherland spoke out about late payments last December, Balfour Beatty said it was “committed to its supply chain and is at the forefront of Government and industry initiatives supporting the well-being of our suppliers”.

“Balfour Beatty has had a long standing valued relationship with Dortech, spanning many projects. The [most recent] contracts were completed in August with the last of these accounts agreed early in November,” it added.