Jarvis' payments record under fire

Shares in Jarvis, the construction and engineering group, plunged 24 per cent after a trade body called for the company to be stripped of government work unless it improves the speed of payments to subcontractors.

Separately City analysts raised questions over its accounting practices, with ABN Amro suggesting that Jarvis could breach banking covenants next year if the company does not collect the £24m it is claiming from Network Rail.

Rudi Klein, chief executive of the Specialist Engineering Contractors Group, said that slow payments by prime contractors such as Jarvis were crippling the subcontractors.

Mr Klein said he had been to see Paul Boateng, chief secretary to the Treasury, over the issue and received a "sympathetic hearing". Later this week he would meet Nigel Griffiths, the construction minister.

Mr Klein said that, over the past 12 months, it had received many more complaints about Jarvis than any other prime contractor, and that companies with a poor payment record "should not be offered public sector work. He added that "Jarvis would be in extreme difficulty" if this policy was adopted. Public sector work, such as schools building, makes up more than half the construction business available in this country.

Jarvis reacted angrily to the SECG, pointing out that the organisation had received only 12 complaints while it worked with "thousands" of subcontractors.