Transformation Archives

Government look to clamp down on late payers

by Iain McIlwee | 27 Jun, 2025 | Transformation

Yesterday Government announced a consultation that could see procurement law impemented that would effectively force all public contracting authorities to exclude firms that fail to meet the recognised payment standards.

On launching the consultation Georgia Gould MP OBE, Parliamentary Secretary for the Cabinet Office stated:

By strategically leveraging our annual public procurement spend, we can protect our supply chains, open up new opportunities for local small businesses and social enterprises, create good local jobs, and deliver greater value for taxpayers.

How reforms could work.

The Procurement Act 2023 (the ‘Act’) has already been implemented and reforms the rules that govern the £385billion spent through public procurement every year. In line with the manifesto, the Government intends to use the Act to create a simpler and more transparent regime for public sector procurement that delivers better value for money, drives economic growth, and safeguards national interests. This consultation looks to take the Act further by:

Requiring large contracting authorities with spend over £100m p.a. to publish their own 3-year target for direct spend with SMEs and VCSEs and report against it annually, as well as extending spend reporting requirements.
Requiring contracting authorities to exclude suppliers from bidding on major contracts (+£5m) if they cannot demonstrate prompt payment of invoices to their supply chains.
Clarifying in primary legislation where it may be appropriate to award contracts for certain services delivered to vulnerable citizens without full competitive procedure, so that decisions can be driven by the needs of the individuals and vulnerable groups.

Supporting national capability

Requiring contracting authorities to make a standard assessment before procuring a major contract (+£5m) in order to test whether service delivery should be inhouse or outsourced.

Supporting local jobs and skills:

Requiring contracting authorities to set at least one award criteria in major procurements (+£5m) which relates to the quality of the supplier’s contribution to jobs, opportunities or skills. Contracting authorities would need to apply a minimum weighting of 10% of the scores available, to social value award criteria.
Requiring contracting authorities to set at least one social value KPI relating to jobs, opportunities or skills in major contracts (+£5m) and report on delivery performance against this KPI in the contract performance notice.
Requiring contracting authorities to use standard social value criteria and metrics selected from a streamlined list (to be co-designed with the public sector and suppliers) in their procurement of public contracts.
Allowing contracting authorities to specify the area in which the social value is to be delivered by choosing between the location of a contracting authority’s area of responsibility, the location where the contract will be performed, or the location where the supplier is based.

Based on the feedback on these proposals and when parliamentary time allows, the Government intends to introduce legislation to amend the Act. As part of this process the government will also look to introduce minor technical amendments to the Act under this legislation.

FIS will respond to the consultation formally, but Iain McIlwee, CEO of Finishes and Interiors Sector welcomed the consultation:

“For too long we’ve had a wishy washy approach to driving better payment through the supply chain with veiled threats of sanctions that “could” be applied. The rhetoric has not been matched by action and the reality is that we have seen little benefit to Government paying faster finding it’s way into the supply chain. It finally looks like this is being addressed and the changes set down here should start to add some teeth to the intent.

We will spend some time going through and looking for any loopholes that this leaves and respond formally, but initial inspection suggests it is a good start. Beyond these reforms we hope to see further activity around Late Payment rules and pushing those outside of the Public Sector to address payment fairness and retention moving forward. The payment culture has been a cancer at the core of our industry without addressing it, any improvement in investment in people or productivity will be limited. If we want to get Britain Building, we need to get money flowing.”

For full details of the consultation, click here.

Please send any comments directly to iainmcilwee@thefis.org to support FIS response, but we also encourage members to respond directly to the consultation via the link above.

FIS Meets New Hospitals Programme team to discuss delivery

by Iain McIlwee | 30 May, 2025 | Transformation

Finishes and Interiors Sector (FIS) was invited this week to attend a Round Table hosted by the New Hospitals Programme along with other national trade bodies to understand how we can maximise opportunities presented by programme for members. The discussion introduced the NHP Plan for Implementation as set down by the Rt Hon Wes Streeting MP, Secretary of State for Health and Social Care. The Plan aims to be a thorough, realistic and costed timetable for delivery ensuring the programme is on the soundest possible footing for delivery of our new hospitals. NHP will be backed by up to £15bn of investment for each five-year spending period, averaging £3bn a year by 2030 to be confirmed at regular Spending Reviews.

The discussion focussed on existing supply chain delivery challenges and how this varies regionally, understanding issues such as labour availability, alignment with other major projects and how we can work more collaboratively to support the programme.

Commenting on the meeting, FIS CEO, Iain McIlwee stated:

“This was a good, open and frank discussion and we got into some of the nitty-gritty of procurement, contracting, where and how modern methods construction can be adopted and workforce availability. Ultimately there is a massive opportunity for the sector and it is encouraging that the team at NHP are engaging early and keen to work with the supply chain and help us in addressing some of the challenges.”

More information on the programme is available within the NHP Supplier Guide. FIS has committed to working closely with the NHP and our membership to support the development and delivery of this plan.

Game-changing tech programme for small businesses set to launch

by Clair Mooney | 7 Mar, 2025 | Transformation

FIS is supporting an initiative to help transform the way small construction businesses embrace technology.

Solving Tech for Small Builders is a first-of-its-kind three-month training programme funded by the CITB Impact Fund. This free-to-join programme offers practical guidance, expert-led training, and a supportive community for those looking to integrate digital tools into their businesses.

“Having worked with over 300 businesses in the last 10 years, most builders I work with want to be able to get more information out of their heads, be able to take a step back, have better work/life balance, have more professional systems and processes in place and be more profitable,” says Maria Coulter BEM, Founder of Construction Coach, who will be delivering the programme. “Many business owners lack the headspace to research and test solutions, making guidance and support essential, unfortunately, whilst there is an industry drive to embrace digital, there is very little practical support to help businesses do it.”

Solving Tech for Small Builders is a structured, hands-on learning experience running from April to June 2025, combining face-to-face sessions in London with weekly online training. The programme will help participants get clear on their challenges and business needs, define their goals, consider what specific technology can support them in the categories of, get work, do work, get paid; embed solutions and ensure long-term success.

Key dates include the launch event on 8 April 2025 at The Flēot in London, a pioneering green and digital construction skills hub, located in Fleet Street Quarter. A live session exploring tech solutions on 13 May 2025, and the programme wrap-up on 24 June 2025. In addition, weekly 90-minute online training sessions will take place every Tuesday from 9:30 to 11am. Following the initial programme, a self-paced online version of the course will launch in September 2025, providing continued access to digital transformation resources.

Solving Tech for Small Builders offers a unique opportunity for small construction businesses to embrace new technology with confidence. Participants will create a tailored roadmap, ensuring that their chosen solutions align with their specific business needs. By joining the programme, they will become part of a supportive community of like-minded small builders, fostering collaboration and shared learning.

Small construction businesses face significant challenges when adopting technology. Many encounter short trial periods that do not allow adequate time for proper testing, making it difficult to assess the true value of digital tools. Additionally, limited support from tech providers—who often lack an understanding of the UK construction industry—leaves business owners without the guidance they need. An ageing workforce further complicates digital adoption, as some employees may be reluctant to embrace new solutions.

Solving Tech for Small Builders was put together by Construction Coach in collaboration with CITB levy payer, North London Loft Rooms and delivery partners Limes Consulting and RLB digital. It aims to bridge the gap by offering practical support to help small builders choose, test, and successfully implement the right technology for their business.

Small businesses looking to work smarter, not harder, and stand out from their competition are encouraged to sign up before spaces fill up.

Register: https://constructioncoach.co.uk/solving-tech-for-small-businesses-sign-up/
Contact: maria@constructioncoach.co.uk
Phone: 0115 9699925

FIS relaunch Integrated Management Standard to support organisational capability

by Iain McIlwee | 13 Nov, 2024 | Contractual and Legal, Main News Feed, Transformation

New requirements in the Building Regulations identify the need for businesses to demonstrate organisational capability. On a basic level, this means businesses will need to evidence how they check people are competent and ensure they are supported by effective process controls that support consistent delivery. This is not really a significant change as businesses have always had a legal requirement to ensure all reasonably foreseeable risks are effectively managed, but it does mean clients and Building Control officers will be showing more interest in your processes and management systems and will have more tools at their disposal to enforce where a business or individual fails to hit the required standards.

To support our community, the FIS Integrated Management Standard (IMS) has been relaunched as part of a newly developed Organisational Capability Toolkit. This toolkit will help members implement tried and proven methods of streamlining their company for the benefit of their business and its stakeholders. The toolkit will help to link and contextualise the wealth of information that FIS members have available to support compliant business management and how they can use their membership to support claims of organisational capability.

This IMS sits as a central resource to help align and control resources. It provides a framework for implementing risk management systems (supported by the FIS Product, Process, People Quality Framework) that will help organisations to meet statutory and legislative requirements.

On relaunching the standard at the FIS Conference and AGM in November, FIS CEO Iain McIlwee stated:

“This standard was developed originally to support the FIS vetting process, but really comes into its own in this new environment. It is clear in our work with members that many construction firms have great processes in place, but there can be a real disjoin between these processes. Across the sector we see design, procurement, contracts and legal, and construction processes that should complement and support each other, however they often clash, cause confusion and conflict and ultimately undermine delivery. This toolkit is a great opportunity to start to look collectively at how we can not just hit the baseline of compliance, but help to raise standards, promote professional businesses and support the Responsible No”.

The new FIS Organisational Capability Toolkit is available here.

CLC call Halt on Contract Amendments

by Iain McIlwee | 24 Oct, 2024 | Main News Feed, Transformation

The Construction Leadership Council (CLC) has published a hard hitting statement calling a halt on the ongoing practice within the construction sector, of industry-approved forms of contract being amended by clients and their solicitors to introduce terms that are onerous and/or difficult to insure. This statement has been issued and is the conclusion to ongoing work through CLC Professional Indemnity Insurance Working Group.

The Construction Leadership Council (CLC), as part of the Building Safety Workstream, established a Working Group to focus on Professional Indemnity Insurance. The key objective of the group was to understand and look to address concerns over the cost, availability and limitations in insurance cover for all parts of the supply chain, from principal designer and contractor through to consultants and specialist contractors. As part this work the PII Taskforce supported an International Underwriting Association event on 31^st January 2024 entitled “Competence in the Construction Sector”. The event reviewed new regulatory requirements in the Building Safety Act. Speakers were drawn from the construction, governmental, regulatory, legal and insurance sectors with particular focus on competence requirements and how they may help to reduce risk in the construction process. Wider inference of the Building Safety Act and what can be learned from recent court cases was also covered.

An open panel debate followed looking at the implications on the insurance process. It was recognised within these discussions that, whilst the work on competence is encouraging and should help to reduce risks moving forwards and hence availability of cover. Concerns were raised over design liability being pushed deeper into the supply chain leading to confusion around accountability for design elements. It was noted in discussion that heavily amended contracts add to confusion around risk and contingent risk, impact insurability and potentially create gaps in insurance cover for specific elements (for example, interface details and fixings).

Following exchange between the Insurance Sector and representatives of the CLC confirmed that there is a need to highlight this risk. The key assertion in the statement is that “standard form building and engineering contracts and professional services contracts issued by contract-producing bodies, should be used by clients with no amendments, except where necessary in the context of project-specific risks and relationships. The CLC believes that onerous amendments make contracts unviable, reduce competition, increase risk and lead to unnecessary legal costs required to review legal liabilities created by the amendments”.

Introducing the statement Samantha Peat, Chair of the CLC PII Working Group said:

“A sensible approach will simplify risk allocation, give clarity to the project team and their PII providers, and address the concerns for which the CLC PII Working Group was originally formed, namely, to address concerns about cost and efficacy of Professional Indemnity Insurance in Construction. It will also support the focus on accountability, competence and the need for better information management called for by Dame Judith Hackitt and enshrined within the Building Safety Act and the wider reform of the Building Regulations.”

FIS CEO Iain McIlwee responded:

“This is a massive statement from the Construction Leadership Council – we have to stop this routine amendment of the standard contracts.

This statement echoes the long held concerns of the FIS Community and I would like to personally thank Samantha Peat and colleagues in this Working Group for the amount of time that has gone in to establishing the forum and drawing the right people together to have the open and pragmatic discussion with the insurance industry that has resulted in this clear an unambiguous statement.

We have a legislative process that focusses on duty and a contractual process that focusses on passing the buck – this is bound to create tension. Boundaries need to be reset or we are left with impossible problems, uninsured elements and ultimately the potential for stranded assets and uninsured buildings. T

his is Leadership and we applaud the CLC and supporting representatives from the Insurance Sector for taking a strong line. The statement in itself will not change the world, but what we do with it can. For me the clear message here empowers the Responsible No by starting to spotlight the Irresponsible Ask. Contract amends are at the heart of the cultural concerns in construction – change is inevitable and has I believe been catalysed today”

The full statement can be read here.

Through the FIS Responsible No Campaign, the organisation is offering subsidised contract reviews and asking members to report (particularly public sector) contracts that are subject to heavy amends and also provide details of Irresponsible Contractual Clauses so that FIS can address behaviours directly with the client. You can find out more about the FIS Responsible No Campaign here.

Government takes action to back small businesses and tackle late payments

by Iain McIlwee | 11 Oct, 2024 | Contractual and Legal, Main News Feed, Transformation

The government announce the introduction of tougher measures to tackle late payments to small businesses.

Secretary of State Minister Jonathan Reynolds has set down his commitment to:

foster a strong payment culture in the UK by bringing the payment performance and behaviour of large companies more clearly into focus.

The Minister confirmed intent to lay secondary legislation “in this parliamentary session” to make it a requirement for large companies to extend information requirements about their payment performance in their Annual Reports. Changes will include the additional requirement to report on value of invoices outstanding and, for construction firms, their practices, policies and performance with respect to retention clauses in any qualifying construction contracts with suppliers. The measures are intended to increase transparency around the payment practices of large businesses and bring them into focus for boards and investors.

The Minister also confirmed that Government will be launching a new supercharged Fair Payment Code to be overseen by the Small Business Commissioner (a voluntary code of best practice for companies committed to fair and fast payments that can be set as a procurement requirement). This will replace the existing Prompt Payment Code, with a clearer and more measurable set of ambitious commitments and will be a further lever to improve the UK’s business payment culture by shining a light on the best performers.

The Department for Business and Trade will also be launching a public consultation “within months” on additional legislative measures to address late payments and long payment terms to ensure improvements in payment times, especially for small businesses and the self-employed.

The Small Business Commissioner, Liz Barclay, said:

I am delighted to announce a new Fair Payment Code will be launched this autumn. The new code will reward businesses that treat their suppliers fairly and pay them quickly. It will also include an ambitious new Gold Award which aims to make 30-day payments the new standard for which businesses can aim.

We need sustainable, resilient businesses at all levels of the supply chains, to achieve the growth the economy needs. That means paying everyone from the largest supplier to the sole trader quicker, so they have the confidence to invest, improve productivity and grow. Fair payment terms and on time payments are the key.

Responding to the announcements FIS CEO, Iain McIlwee said:

The measures on reporting are welcome and mirror the work we supported with the last Government and recently wrote to the Construction Minister (Sarah Jones) to ensure that they did not get lost in the change. The reality is that better measurement will help to isolate the problem, but further consultation and action is required to solve it. We can’t wait for the data to tell us what we already know. The problems the Minister is looking to address are hiding in plain sight.- we only need to look to the spate of recent insolvencies and particularly the devastation caused by the failure of ISG to see the ultimate impact.

We also welcome the changes to the Prompt Payment Code. FIS has worked closely with Liz Barclay and found her to be a powerful advocate for the SME and we will be doing all we can to support Liz in this work and ensuring that the Prompt Payment Code is front and centre on all Public Sector Jobs and principals starts to resonate with Responsible Clients in the private sector too.

FIS will be drawing on the Manifesto already issued to the Construction Minister as the mainstay of our response. Key recommendations included in this document are:

NEAR TERM LEVERS (which have been addressed in above):

More robust enforcement of the duty to report legislation: Improvements to the Payment Practices and Performance (Amendment) Regulations announced in Autumn 2023 are positive, but
need to be backed by effective enforcement. To date there has been no enforcement of the duty to report, and the Prompt Payment Code has not been backed with sufficient resources to deliver the intended changes. The Office of the Small Business Commissioner needs more authority and resource to support effective enforcement.

LONGER TERM LEVERS
Reform of the Construction Act is required
The process surrounding application, due dates and pay less notices needs to be simplified to ensure that they cannot be abused. Drawing on international comparisons, the Irish Construction Contracts Act provides for a 30-day payment period from the date at which the payment claim is submitted. This is far simpler than the ‘due date’ referenced in the UK Construction Act, which relies on supplementary information in the contract that can be distorted. There is also less room within the Irish legislation to extend payment terms in a subcontract agreement.

The Construction Act should be amended to ensure retentions are automatically released at the defined date. They should not require additional applications from contractors or relate to dates that are not explicitly related to the completion of their works.

Equally, retention money should be held in trust; it cannot be forgotten that Carillion wiped out £700m of retentions held against the supply chain. Consideration should be given to replicating the recent developments in New Zealand where it has been legislated that retentions are held in trust.

Where Collateral Warranties are held, retentions should be immediately and automatically returned.

The process and cost of adjudication also needs to be considered. Costs will be eased by greater clarity in the Act on payments and better use of standard contracts. Adjudication decisions should be binding to
help avoid costly legal costs/

Make interest on late payment compulsary
New EU regulations require compulsory interest payments to be automatically applied to late payment and accrued until payment of the debt. This makes non payment a liability as opposed to an enforcement right that an embattled supply chain is disinclined to impose.

If you have any views on payment reform that you feel should be reflected in FIS Lobbying work, please email iainmcilwee@thefis.org

The FIS Manifesto can be viewed here