Debt in the construction industry
In very general terms, the word ‘debt’ refers to a sum of money that is owed. Being in debt is the state of owing money.
Construction 2025, the government's long-term vision for the future of the construction industry, cited equitable financial arrangements and certainty of payment as critical success factors for the industry and proposed a need to ‘...create conditions for construction supply chains to thrive by addressing access to finance and payment practices.’
The Housing Grants, Construction and Regeneration Act 1996 (also known as the Construction Act) includes provisions to ensure that payments are made promptly throughout the supply chain.
In addition, other initiatives have been introduced such as the prompt payment code, the construction supply chain payment charter, the Small Business, Enterprise and Employment Bill and project bank accounts.
The Late Payment of Commercial Debts (Interest) Act provides for simple interest to be payable on outstanding debts at a penal rate of 8% above the Bank of England base rate. Additional penalties can also be levied. The Late Payment of Commercial Debts Regulations bolster the provisions of the Late Payment of Commercial Debts (Interest) Act.
However, debt remains a very serious problem for the construction industry, which is heavily dependent on predictable cash flow. Late payment and non-payment continue to be common and can have a significant impact, cascading down an entire supply chain and putting businesses under financial strain.
Articles about debt on Designing Buildings include:
- Assignment of debt.
- Bad debt.
- Cash flow.
- Construction supply chain payment charter.
- Debt assignment.
- Fair payment practices.
- Housing Grants, Construction and Regeneration Act.
- Late payment.
- Overdue debt.
- Pre-action protocol for debt claims.
- Project bank accounts.
- Prompt payment code.
- Small Business, Enterprise and Employment Bill.
Featured articles and news
Shortage of high-quality data threatening the AI boom
And other fundamental issues highlighted by the Open Data Institute.
Data centres top the list of growth opportunities
In robust, yet heterogenous world BACS market.
Increased funding for BSR announced
Within plans for next generation of new towns.
New Towns Taskforce interim policy statement
With initial reactions to the 6 month policy update.
Heritage, industry and slavery
Interpretation must tell the story accurately.
PM announces Building safety and fire move to MHCLG
Following recommendations of the Grenfell Inquiry report.
Conserving the ruins of a great Elizabethan country house.
BSRIA European air conditioning market update 2024
Highs, lows and discrepancy rates in the annual demand.
50 years celebrating the ECA Apprenticeship Awards
As SMEs say the 10 years of the Apprenticeship Levy has failed them.
Nominations sought for CIOB awards
Celebrating construction excellence in Ireland and Northern Ireland.
EPC consultation in context: NCM, SAP, SBEM and HEM
One week to respond to the consultation on reforms to the Energy Performance of Buildings framework.
CIAT Celebrates 60 years of Architectural Technology
Find out more #CIAT60 social media takeover.
The BPF urges Chancellor for additional BSR resources
To remove barriers and bottlenecks which delay projects.
Flexibility over requirements to boost apprentice numbers
English, maths and minimumun duration requirements reduced for a 10,000 gain.
A long term view on European heating markets
BSRIA HVAC 2032 Study.
Humidity resilience strategies for home design
Frequency of extreme humidity events is increasing.
National Apprenticeship Week 2025
Skills for life : 10-16 February