Specialist contractors are to lobby the Scottish government to introduce project bank accounts on all public sector schemes worth more than £3m, write Sarah Richardson and Olivia Boyd.
The Specialist Engineering Contractors’ (SEC) Group is hoping to meet MSPs at the Scottish parliament in January to push for the move, which the trade body says could cut up to £750m off the cost of construction in Scotland.
Project bank accounts, under which a project’s funds are held in escrow, are designed to protect contractors against payment disputes and the impact of insolvency in the supply chain.
A pilot project is being trialled in England by the Highways Agency this year, and several other public sector clients, including Crossrail, are considering adopting the initiative. It is expected that another large public sector client will announce a trial within the next month.
There is good reason for the government to help SMEs
Rudi Klein, SEC Group’s chief executive, said the accounts could have more impact in Scotland because of its higher proportion of public-sector-led projects.
He said: “The Scottish government has far more capability of directing this than the rest of the UK. We think the current climate creates a positive environment for moving this agenda along, as there are real pressures on firms. When the public sector is nationalising banks, there is good reason for them to lead on this and help SMEs weather the storm.”
HBOS and Barclays have developed project bank accounts for use in construction. Despite the uncertainty surrounding HBOS, which is in takeover talks with Lloyds TSB, the bank confirmed this week it was continuing to offer the product.
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