A Tyneside construction boss has told how his firm is being forced to let staff go because of long delays on council payments.
North Tyneside’s elected mayor Norma Redfearn has been told she must do more to help local firms after it emerged the private firm running many council contracts in the borough is taking in some cases up to 60 days to pay out.
The payment delays from council-contractor Kier mean the likes of Gary Davis’s Team Build firm cannot take on new jobs.
The firm has even had to let an apprentice go and halt recruitment plans as it copes with being frozen out of jobs for the council.
Just last year his firm won a best construction firm award from North Tyneside’s mayor, but Mr Davis said it is now almost impossible to secure contracts with the council.
Mr Davis said: “We were invited to tender for work with Kier and went on to be invited to a pre-start meeting only to be advised that we would then have to carry out the works on a 60-day payment term.
“I explained that we are unable to work under these terms as we cannot afford to finance the works.
“Cash flow is the lifeblood of any business especially smaller firms. We pay our workforce weekly and our supply chain monthly.
“The majority of our workforce lives in North Tyneside yet we are unable to gain employment due to the restrictive payment terms imposed by Kier.
“This has contributed to the reduced work available to us and as such we have had to recently lose one of our apprentices.
“We are not asking for special treatment we are only asking that payment terms are fair and reasonable.
“It would be ludicrous to expect that all North Tyneside employees were paid on the same terms, so why then should this apply to those it indirectly employs?”
Last year the Government started a consultation on late payments, with Business Secretary Vince Cable saying more had to be done to ensure cashflow, “the lifeblood of any business,” was not delayed. And while North Tyneside said it wants to do all it can to speed up payments, there appears to be little hope of an immediate change in policy for firms such as Team Build.
A council spokesperson said: “North Tyneside Council and its commercial partners are committed to working with local companies and suppliers.
“Where possible we try to work with subcontractors and the supply chain to address any cash flow concerns.
“As a commercial partner of the council, Kier North Tyneside on average, pay invoices in 43 days.
“The council is actively looking at how we may make further improvements and will be working with Kier, Capita, Cofely and some of our other major commercial partners to look at speeding up payment to the supply chain.”