The Office of Government Commerce's (OGC) Fair Payment Charter commits public sector clients and their principal contractors and supply chain members to formally adopt "Fair Payment" principles  in future construction projects.

The Charter-signing ceremony was held at the OGC's offices, with repesentatives from The Construction Industry Council, Construction Clients Group, Construction Confederation, National Specialist Contractors Council, Local Government Task Force, Construction Products Association and Specialist Engineering Contractors Group signing it. OGC and Department of Business Enterprise and Regulatory Reform signed on behalf of the Government.

Stephen Timms, Minister for Competitiveness, said: "Over a third of the output of the construction industry is for the public sector. This means that on many issues Government and the public sector can make also make a difference through its procurement function. 

"I am delighted that the industry and Government have been able to come together to agree what principles of fair payment should apply on Government construction projects."

The Charter is part of the Government's  Fair Payment Initiative. The Initiative delivered cross-industry agreement on the principles of fair payment best practice in public sector construction projects throughout the construction supply chain. It is estimated that widespread adoption of these principles could save the public sector up to £750m a year by significantly reducing financing and risk elements from project costs.

The recently published  Guide to Best Fair Payment Practices, as part of the Initiative, describes a range of good practice tools and models. It includes the Fair Payment Charter which commits clients, lead contractors and their supply chains to:

Greater transparency

No unfair withholding of retentions

More efficient payment procedures

Payment periods not exceeding 30 days

Central government construction clients are expected to adopt the principles set out in the Guide and the Fair Payment Charter by 1 January 2008. OGC,  working with industry bodies, will monitor the progress of implementing the Fair Payment Practice and the adoption of the Charter during the two years starting from January 2008.