Construction giants 'bullying' small businesses A number of small construction business owners who spoke to The Daily Telegraph complained of "dire" practices by some main contractors. They reported that more than £1bn of savings the Government asked leading contractors to make is resulting in suppliers being squeezed and payment terms stretched. The financial director of an engineering subcontractor based in the North West, who asked not to be named, said: "Getting paid in this industry is a farce. On Government work, even the very best contractors don't pay you within 30 days. It's more like 60. There's a total imbalance of power. I had a company try to get additional goods out of us we hadn't quoted for, saying they'd charge us damages if we didn't. They just say, 'if you're going to be awkward, we just won't pay."" The financial director added that while so called "pay when paid" clauses in contracts - which sees slow payment by main contractors passed down the supply chain - are prohibited, they are still in widespread use. Other practices include charging fees just to tender for work and asking for retrospective discounts for jobs that have already been completed. The bad payment practices prevent us form hiring, expanding - it stifles us. We can only grow if people pay us faster. Mr Ashmore commissioned the survey among more than 250 subcontracting firms. It also found that 97pc of small construction companies reported feeling unfairly treated by main contractors, and just 5pc of all work was paid within 30 days. He said most contactors are either unaware of an anonymous 'mystery shopper' service which allows them to identify big contractors with poor supply chain practices, too afraid of losing work to use it or lacking in faith that reports would be followed up. Ian Brightman, managing director of steel fabrication firm Steel Industry Services, said he is trying to move most of his company's work to Australia because of the issue. "Little firms are used as banks for the big firms and it's got worse because there's less money around," he said. People are cutting their own throats to get work. In Australia, they pay bills in two weeks. Here you get bullied. The Government needs to get on top of it. Another sub-contractor described the situation as producing "a Rolls Royce for the cost of a Ford Focus, in front of time and then [waiting] for weeks beyond the due date just to get paid less than what was agreed." Payment terms are getting stretched and unfair trading conditions are becoming part of the norm. We are expected to pay money to pre-qualify [for tendering lists] yet contracts are awarded on cheapest price and not best value. A Cabinet Office spokesman noted that the 30-day sub-contractor payment rule only applies to suppliers of central government, "although we encourage all public sector bodies to adhere to this in their contracts." Government has an excellent record on paying its bills quickly and we expect our suppliers to do the same. When work has been done, especially by an SME for whom cash flow can be critical, it is inexcusable not to pay promptly for that service. To help us monitor this we have introduced the mystery shopper service. We investigate referrals where prompt payment isn't happening, working with our Crown commercial representatives and departments to resolve the issues, and we name and shame contractors where the case is clear cut. We also tackle these issues outside central government. He added that five complaints about contractor behaviour are being investigated. We encourage suppliers to help us stamp out bad procurement practice in the supply chain of government contracts by using the mystery shopper service. However, one of the respondents to the survey said: "Government has to get a grip...and as a minimum requirement, should pass legislation requiring all end user clients and main contractors to utilise standard industry agreed forms of contract without amendment. Bespoke contracts [with longer payment terms] should be banned.