The late payment epidemic in UK construction

Abstract

Purpose

The UK government has elaborated the effect of late payment on the economy, with its impact on the construction sector being particularly pronounced. This paper aims to evaluate the late payment epidemic that persists within the construction industry, specifically analysing the effectiveness of government-led voluntary payment initiatives.

Design/methodology/approach

A mixed philosophical lens is adopted that incorporates both pragmatism and post-positivism to examine the late payment phenomena. Couched within deductive reasoning and a case study strategy, a questionnaire survey was conducted to elicit responses from one-hundred construction professionals. Elucidating upon respondents’ perceptions of the UK’s late payment epidemic, a comparative analysis was undertaken of upstream (main contractor) and downstream (subcontractors/suppliers) contractors through Cronbach’s alpha, descriptive statistics, independence chi-square test, Kruskal–Wallis test and Mann–Whitney U test.

Findings

Emergent findings reveal that in practice, the monitoring and enforcement of government-led voluntary payment initiatives has been unprosperous with numerous contractors being forced to adopt indefensibly poor and punitive payment practices. Survey responses and extant literature substantiate and underscore the industry’s need to strengthen voluntary government-led payment initiatives. To create a responsible payment culture, any future code created should be mandatory and enforceable as a self-regulating approach has failed dismally. The work concludes with practical additional measures that could be introduced to create a responsible payment culture and promote ethical trading within the UK construction industry.

Originality/value

This paper constitutes a novel vignette of, and reflection upon, contemporary practice in this area of construction finance and serves to emphasise that very little has changes in the sector despite numerous UK government led reports and interventions.

Citation

Stewardson, A., Edwards, D.J., Asamoah, E., Aigbavboa, C.O., Lai, J.H.K. and El-Gohary, H. (2023), "The late payment epidemic in UK construction", Journal of Financial Management of Property and Construction, Vol. 28 No. 3, pp. 374-397. https://doi.org/10.1108/JFMPC-03-2022-0016