PROJECT BANK ACCOUNTS NEEDED TO TACKLE LATE PAYMENT, SAY MARION FELLOWS

15th January 2019

Marion Fellows, MP for Motherwell and Wishaw, has backed a ten minute rule bill calling for payments on government and public authority contracts to be made through a ‘project bank account’ system ensuring small businesses are paid directly and on time.

The ten minute rule bill, titled Public Sector Supply Chains (Project Bank Accounts) Bill – was presentedin Parliament today (15/1/19) by Labour MP for Oldham East and Saddleworth, Debbie Abrahams, with cross party support.

The bill would set in law the requirement for parties delivering government and public authority work – from the lead contractor right down the supply chain – will receive payment from the same secure ‘pot’ of money. 

Mrs Fellows said:

“I’m supporting Project Bank Accounts because it is only right that government and public authority projects should be setting the standard for making sure that supply chains are paid promptly and on time for work done and project bank accounts are one way to ensure this happens.

“I’ve spoken with many small businesses locally and across Scotland and it is apparent that late payments from large businesses is a massive issue across all business sectors leading to billions of pounds being owed to smaller companies for work that has been done.

When payments take a long time working their way along a supply chain from the contracting government department or public authority there is a risk that the cash could be cut-off at any time because of payer insolvency as happened with Carillion last year.”

Rudi Klein, Chief Executive of Specialist Engineering Contractors’ (SEC) Group, which represents the interests of the specialist construction contractors across the UK, is a leading late payments campaigner and advocate of project bank accounts. 

Klein said:

“Given the precarious financial state of many of the UK’s major contractors Debbie Abrahams’ bill is now extremely timely and it’s great to get support for the idea from Marion Fellows.

“SMEs in construction supply chains have had to put up with payment abuse over many years and project bank accounts are now acknowledged to be the most effective method of ensuring secure and regular cash flow.”

Martin McTague, Federation of Small Businesses, Policy and Advocacy Chairman said:

“The scourge of late payments causes untold misery for thousands of small business owners, their families and their staff. 

“Government, as a customer, should setting a good example here by using project bank accounts for major public procurement contracts. At a stroke this would prevent small suppliers going bust through no fault of their own, where a contractor goes bad – as happened with Carillion exactly one year ago. 

“It is right and proper that there be cross party support for this bill. The fact is Whitehall simply doesn’t use project bank accounts nearly enough – that needs to be fixed. “Projects that use taxpayers money should be spent to the standard taxpayers expect, not hoarded by prime contractors. MPs that support project bank accounts are standing up for small business.”