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Support increases for project bank accounts

22 January 2018

Support for project bank accounts (PBAs) from the Federation of Small Businesses (FSB) has been welcomed by the Specialist Engineering Contractors' (SEC) Group.

Having championed the use of PBAs for some time (see PFM January 2017, p20), SEC Group has urged more support for public sector projects over £1m in value to use them.

This will see all those within the supply chain paid from the same account, which will be ring-fenced and avoid the issues now being experienced by many companies following the collapse of Carillion last week.

SEC chief executive officer Professor Rudi Klein said: "“I would now like to see the Government introduce legislation requiring PBAs to be used on all construction works over £1m.

"Queensland in Australia has done this. From 1 January 2018 this will happen on public sector works and from 1 January 2019 on private sector works.”

SEC and many other trade associations are also supporting the call for retention funds to be placed in central accounts, which would see the money protected when organisations at the top of the supply chain fail.

This is also highly relevant in the case of Carillion, which was said to have held millions of pounds of retention funds which are now unlikely to be paid as they were unprotected.

The effects of the Carillion demise is expected to be felt for some time and industry experts have said it is likely to be several years before the final picture of the scale of the damage emerges.

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