Industry leaders push for project bank accounts

Representatives of the Specialist Engineering Contractors’ (SEC) Group have met with Lord Mandelson, Secretary of State for Business, Enterprise and Regulatory Reform, to recommend project bank accounts.

This followed Lord Mandelson’s statement that he would seek to improve cash flow for SMEs by requiring public sector purchasers to pay their bills within ten days.

Claire Curtis-Thomas MP, who led the SEC Group delegation, assured the secretary of state that the most effective solution, as far as the construction industry was concerned, was for the government to ensure that project bank accounts were established as a matter of routine in respect of all public sector contracts.

SEC Group chairman Trevor Hursthouse added that a positive response from Lord Mandelson to this proposal could significantly reduce the risk of widespread insolvencies across construction.

According to Diane Johnson, who runs electrical contractor Eric Johnson of Northwich, businesses in the North West were already experiencing difficulties that were caused by the current slowdown and lengthening payment periods.

“Firms are having to make redundancies, which will have an inevitable effect on investment in apprenticeships and training,” Ms Johnson pointed out.

“The implementation of project bank accounts across UK construction would revolutionise payment practices in the construction industry –and, at the same time, make a significant contribution to resolving the current problems affecting SMEs,” Ms Curtis-Thomas concluded.