SCOTT WRIGHT
THE UK Government has been urged to extend the use of project bank accounts for all major public contracts to ensure small firms do not get caught up in financial catastrophes such as the collapse of Carillion.
In a letter to David Lidington, Minister for the Cabinet Office, the Federation of Small Businesses (FSB) calls for the money for public projects to be held in trusts, not by tier 1 contractors. The FSB argues that firms throughout the supply chain would then be protected if a major company running a public project goes bust, allowing them to be paid for work they have already completed. It also says holding project money in trusts would help tackle the issue of late payment by bigger companies.
Carillion collapsed last week after debts spiralled to £900 million, sparking fears for thousands of jobs and concern subcontractors will be left out of pocket. The FSB’s Mike Cherry said: “Introducing protected project bank accounts, for all public projects, would ensure that money for work carried out would still be paid to those who have put in the hours and delivered on what they’ve been asked to do.”
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