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Welsh Government to make use of construction work PBAs from January 1

Devolved authority will require project bank accounts to be in use for construction or service contract work valued at over £2m that it fully or partly funds

The Welsh Government will mandate from January 1 that project bank accounts (PBAs) are used for building projects valued at over £2m and that are procured by any of the devolved authority’s bodies.

The move will see the country following other devolved authorities in the UK that have adopted project-specific bank accounts as a means to tackle concerns around late payments for contractors.

Use of PBAs will be required unless a “compelling reason” is given not to make use of the accounts for any conventionally-funded construction and infrastructure projects. It will also apply to infrastructure and service contracts that are either fully or partly-funded by the Welsh Government. 

An official statement on the policy by Mark Drakeford, the Welsh Cabinet Secretary for Finance said, “Project bank accounts provide a mechanism to meet statutory requirements and facilitate fair and prompt payment, streamlining the process for clients, contractors and sub-contractors.”

He added, “Project bank accounts were developed to address poor payment practices in the construction industry but they can be applied to any contract, which relies on sub-contractors.

The Welsh arm of the Specialist Engineering Contractors’ (SEC) group has long backed the introduction of project bank accounts for government contracts, arguing they are the most effective means of securing regular payments. Cashflow is viewed as a significant challenge for meeting broader aims for improved productivity in the construction supply chain.

Cat Griffith Williams, national executive officer for the SEC group in Wales, argued the move would curb abuse of payment practices in the country that are proving to be a significant concern for SMEs.

She said, “Poor payment practices are the biggest killer of productivity and growth in Welsh construction.” 

SEC chief executive Rudi Klein also welcomed the PBA commitments from the Welsh government.

He said, “Wales now joins Northern Ireland, Scotland and the UK Government in using PBAs in public sector construction. Evidence is now emerging that as well as protecting SMEs from abuse they are also helping to reduce the cost of construction.”

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