Call for project bank accounts

FSB demands protection from big firm failures

Mike Cherry

Mike Cherry: ‘small firms put in jeopardy’

Small firms have joined the call for ‘project bank accounts’ to be set up to help avoid more problems for sub-contractors caused by the collapse of main contractors.

The Federation of Small Businesses is supporting demands to set up these accounts for all major projects following the collapse of construction and facilities management company Carillion.

It would mean payments being deposited into an independently controlled account from which all contractors are paid. At present, main contractors distribute payments and often hold on to the funds, causing cash flow problems for suppliers.

Project bank accounts have operated for public sector projects in Scotland since 2013. Apart from easing the late payment problem they also provide some protection for suppliers in the event of main contractors going bust.

In a letter to David Lidington, Minister for the Cabinet Office, the FSB has urged the Government to adopt the practice.

FSB national chairman Mike Cherry said: “Countless small businesses working for Carillion have not been paid for months and are facing the prospect that they will not receive a penny for their hard work, products or services.

“It is unacceptable that the future of these businesses, and the jobs they provide, have been put in jeopardy by the reckless and irresponsible behaviour of one company. Government must take action now to ensure that this cannot happen again.”

The twin threats to small firms from project failures and Brexit are likely to be discussed at the FSB Scotland annual lunch in Edinburgh today

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