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"Project Bank Accounts would have avoided many Carillion issues" govt told

SEC Group head points Greg Clark towards construction reform

Rudi Klein, chief executive of specialist contractors’ body SEC Group, has told BEIS secretary of state Greg Clark that the use of project bank accounts and third party deposit schemes for retentions would have avoided lots of the problems facing the construction supply chain as a result of Carillion’s collapse.

Prof Klein said that it was now vital for trade associations across the industry to try and give clear advice to their members at a time when there are ”not a lot of places to go.”

He argued that where contractors are asked to perform work, they should seek clarity on nature of the job either from PwC or the Official Receiver that is overseeing Carillion’s contracts.

Professors Klein added, “They should define what the work and how much and when they will get paid.”

The SEC Group said that banks were already expressing concern about cash flow in the industry as a result of Carillion’s collapse, which would intensify pressure on the supply chain.

Professor Klein told H&V News that there was particular concern about the impacts of Carillion’s liquidation on specialist contractors such as HVAC service suppliers. He argued that the higher level of upfront costs specialists are required to put into contracts risked even higher potential financial loses as a result of lost work or funding.

Prof Klein said there was a growing industry consensus for the government to get behind the Retentions bill introduced to parliament earlier this month by MP Peter Aldous to mandate third party deposit schemes for cash retentions.

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