Campaigners trying to protect thousands of suppliers left out of pocket by the collapse of Carillion on Tuesday used the anniversary of its liquidation to call on Parliament to reform industry payment practices.
Almost 12,000 subcontractors worked directly for Carillion when it went under and about £2 billion went unpaid, sinking many of Carillion’s creditors.
Late payments campaigner and Labour MP Debbie Abrahams today secured a Ten-Minute Rule Bill to propose a “project bank account” system for government and public authority contracts, which would protect smaller suppliers from insolvency further up the chain and speed up payments.
As a private member’s bill the proposal is unlikely to reach the statute book but Abrahams said: “When payments take a long time working their way along a supply chain from the contracting authority there is a risk that the cash could be cut off at any time because of payer insolvency. We witnessed the catastrophic effect this has with the collapse of Carillion, nearly a year ago.”
Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group, has long been campaigning for project bank accounts.
Klein said: “Given the precarious financial state of many of the UK’s major contractors, the Bill is now extremely timely.”
