MP calls for project bank accounts
Abrahams to promote late payments bill in Commons
Debbie Abrahams: ‘massive issue’
Late payments campaigner and MP Debbie Abrahams has secured time in parliament for legislation guaranteeing prompt payment to small businesses.
She has secured a ten minute rule bill which would ensure all payments on government and public authority contracts would be made through a ‘project bank account’ system.
This would mean small businesses would be paid directly and promptly, whilst being protected against losses, such as happened when construction firm Carillion collapsed.
Ms Abrahams’ Public Sector Supply Chains (Project Bank Accounts) Bill , will be heard on 15 January and aims to set in law the requirement that all 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.
Before Christmas, the Labour MP for Oldham East and Saddleworth, challenged the Chancellor, Phillip Hammond, to support her bill to help end late payments and protect small business suppliers from collapses such as happened at Carillion.
Mr Hammond replied that it was “an interesting idea and that the Cabinet Office commercial secretariat is looking at her proposals”.
Since then Ms Abrahams has been in contact with both the Cabinet Office and business ministers in order to secure the Government’s support for her bill.
Her bill follows comments by the Small Business Commissioner Paul Uppal who wants to set up a traffic lights warning system as part of a “name and shame” policy of encouraging large firms to pay suppliers promptly. A survey by the Association of Accounting Technicians has indicated that a majority of MPs support its call for reform.
Ms Abrahams, who created the award winning Be Fair – Pay on Time campaign in 2012, said: “Late payment by 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 authority there is a risk that the cash could be cut-off at any time because of payer insolvency.
“We witnessed the catastrophic effect this has with the collapse of Carillion, nearly a year ago, with £2bn of unpaid invoices to their smaller suppliers, which included builders in my own constituency. The precarious position of other major Government contractors like Interserve means urgent action is required.
“My ten minute rule bill will require all government and public authority work should be paid to suppliers using project bank accounts.”