Bank leaves plumber high and dry: Company could close unless 285,000 pounds for work on City building is paid

Chris Blackhurst@c_blackhurst
Tuesday 29 June 1993 23:02

THE BANK of England has still not settled a plumber's bill for work carried out two years ago. Bob Simpson, owner of a south London company, said that unless the pounds 285,000 bill is paid he will cease trading in the next four months. His seven employees would lose their jobs.

Mr Simpson says he is owed money for work at the Bank's New Change office building in the City. Close to St Paul's, New Change is its main administration centre, providing back- up to the Threadneedle Street headquarters. The Bank's Governor has the use of a top-floor flat.

The work was completed in March 1991. On 19 March this year, Mr Simpson wrote to John Major and Michael Portillo, Chief Secretary to the Treasury, asking to delay value-added tax payments until he received the money. In a reply, dated 21 June, Paul Raynes, Assistant Private Secretary to the Treasury, said such a delay in paying tax was illegal. Mr Raynes disowned any liability for the Bank's non-payment: 'I should add that, although the Treasury is the sole shareholder in the Bank, the Bank itself is not funded by the Government.'

Mr Raynes echoed the views of small business groups which have been campaigning vigorously for large organisations to speed up their payments to suppliers, when he wrote: 'The Government wants to see (businesses) adopt and maintain payment practices which are fair and prompt. Ministers regard the delaying of payment beyond the agreed period as an unfair practice and, in the long run, it is bad for business.'

As far as the Bank is concerned, Mr Simpson is not alone: Taylor Woodrow and Bovis, the construction conglomerates, also have claims outstanding on the New Change building. Bovis was the prime contractor and Taymech, a Taylor Woodrow subsidiary, was sub-contractor. Below them came Simpson's.

The contract contained a common building industry 'pay-when-paid' clause - meaning that Simpson's would only be paid when those further up the line had received their money. The job, to install a heating and drainage system, was worth pounds 750,000 to Simpson's. Because of susbtantial changes to the Bank's plans, the total cost came to almost pounds 1.5m. Most of that money, pounds 1.2m, was paid two years ago.

A Bank spokesman said quantity surveyors were examining the contractors' claims. The Bank, he explained, had no duty towards Mr Simpson - its relationship was with Bovis. This was 'an extremely complex' project.

While the bigger companies may be able to wait, Mr Simpson cannot. 'As far as the Bank is concerned, we are just a small plumbing firm and we can go to hell.'

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