The decision to adopt project bank accounts to protect the supply chain from payment abuse and collapse of main contractors was announced today by Mark Drakeford, Welsh Cabinet Secretary for Finance.
Project bank accounts will be used, unless there is a compelling reason not to do so, on all conventionally-funded construction and infrastructure contracts and service contracts worth £2m or more.
This will apply to any fully or part-funded Welsh Government work, including unusually private public partnerships.
The ground-breaking move means Wales joins Scotland, Northern Ireland and most of Whitehall’s main spending departments in adopting use of ring-fenced payment pots.
This leaves the Educations and Skills Funding Agency alone among the big central public agencies to have eschewed project banks accounts.
Specialist contractors, which have been lobbying for them to be widely adopted across the UK, welcomed the move.
Rudi Klein CEO of UK Specialist Engineering Contractors Group, said: “Evidence is now emerging that as well as protecting SMEs from abuse they are also helping to reduce the cost of construction.”
Cat Griffith Williams, National Executive Officer for SEC Group Wales, added: “Poor payment practices are the biggest killer of productivity and growth in Welsh construction. PBAs will help curb abuse and thus enable small firms to deliver to their full potential.”
Michelle Davies from the Electrical Contractors Association said: “Welsh Government is to be congratulated. I look forward to the time when we can half the threshold for using PBAs.”