The plans were revealed by Claire Curtis-Thomas, the Labour MP for Corby; and Professor Rudi Klein, chief executive of the Specialist Engineering Contractors’ (SEC) Group.
They were both speaking to H&V News after attending a meeting with the business secretary Lord Mandelson, earlier this week, to discuss ways of ensuring better cash flow to small and medium-sized enterprises (SMEs).
Last month, in a bid to support SMEs through the recession, Peter Mandelson pledged that Whitehall would pay its bills within 10 days of receipt of invoice. It also said it was putting plans in place to extend that agreement to NHS Trusts, local authorities and public sector employers in England.
Although the move was widely applauded by industry, there was concern that unless the Government introduced an enforcement mechanism to ensure the entire supply chain benefitted from the speedier payment terms, the pledge would be meaningless.
Ms Curtis-Thomas said: “The Government has already made a commitment to pay first-tier contractors within 10 days [of receipt of invoice]. I’ve been asking Peter [Mandelson] to ensure that contractors who benefit from this great offer cascade that down to the second, third, fourth and fifth-tier contractors.
“We suggested to Peter that with contracts of any significant size that project bank accounts should be established into which all the funds for a particular job are deposited. And then once the contractor has finished his work, he can submit an invoice to the bank and the bank then pays it.
“Mr Mandelson was very responsive to this idea and he was also very enthusiastic about taking our prototype forward. We’ve asked him to write to every Government minister informing them that this facility is available.”
Ms Curtis-Thomas said that with main contractors now taking 115 days to pay their specialist contractors it was imperative the mechanism took off. “It’s in place in some areas now. We just want to make sure that gets extended. There’s an absolute determination in Government not to waste any time on this at all.”
Professor Rudi Klein, chief executive of the Specialist Engineering Contractors Group, said: “It was agreed [at the meeting] that the only way to ensure that the entire supply chain benefits from the Government 10-day payment pledge is through setting up project bank accounts.
'Peter Mandelson is very enthusiastic about the idea, and overall the meeting was very encouraging.”
The Government has recently agreed to make business loans available to SMEs who were having difficulty obtaining finance. Under the £2 billion package, individual firms can borrow up to £250,000 in government loans through Regional Development Agencies.
Commenting on the move, Ms Curtis Thomas said: “We would encourage SMEs to get online to have a look at what’s available. If they don’t like the look of what’s available or it’s too difficult to access then the sector needs to make this known to Government.
“Businesses can contact me if they want but they are to make their views known because we are not messing about.