BRITISH construction companies may be withholding almost 1 billion pounds (US$1.7 billion) in payments to suppliers, a sign the credit crisis and a looming recession are spurring a grab for cash.

The handing over of final payments, withheld until a project is completed, had slowed "dramatically" over the past four weeks and the amount of money owed could be about 50 percent more than two years ago, National Specialist Contractors Council head, Suzannah Nichol, told Bloomberg News in an interview on Thursday. The 7,000 NSCC members were preparing to cut jobs, she said.

The United Kingdom's 82-billion-pound building industry, accounting for about 5 percent of the economy, had ground to a halt, with little work being booked because of low demand and a credit freeze, said Nichol.

The collapse of Lehman Brothers Holdings and banking turmoil, at a time when home building was suffering its worst slump for 25 years, confirmed industry fears that a recession was inevitable, she said from her London office.

"I was asked to do a job in June, when they knew they never intended to pay me," said Barbara Beeson, a blinds fitter in Eastbourne, southern England, who had to file legal proceedings against Oakdene Homes to get 12,000 pounds owed. "My business wouldn't have survived if I hadn't got them to pay up."

Just 15 percent of the NSCC's members were paid within 30 days of completing a job, Nichol said. The average was about 60 days while Carillion Plc, Britain's No. 2 builder, averaged 86 days, she said.

Carillion Chief Executive Officer John McDonough said his company always paid on time. "We can't afford to bugger around," said McDonough in a phone interview.

Taylor Wimpey Plc, the No. 1 home builder, has until February to persuade debt holders to ease covenants.

Oakdene Homes is in rescue talks with banks after a freeze in mortgage markets and tumbling sales. "There's a bit of a supply chain paying later but nothing out of the ordinary," Oakdene CEO Carl Turpin said in a call from his cell phone on Wednesday. "Our people are always looked after."

Britain's economy may already be in a recession and inflation may slow below the central bank's 2 percent target, Bank of England policy maker Andrew Sentance has said.