SELECT has taken the opportunity of the crisis caused by the Carillion collapse to write, via the Scottish branch of the Specialist Engineering Contractors’ Group to the Minister for Business, Innovation and Energy.
In its letter, SEC said “The Carillion collapse has vividly illustrated the lack of payment security in the construction industry. Estimates of supply chain losses continue to rise on a daily basis and we are of no doubt that some of these losses could have been avoided if measures had been in place to provide security of payment to Carillion’s supply chains”.
It has asked the Minister to:
- Introduce legislation to ensure that all retention payments are put into a protected trust fund similar to the Tenancy Deposit scheme.
- Reduce the level at which Project Bank Accounts are mandated to £2m to ensure that more businesses can benefit from this payment protection. This would follow the levels set in Northern Ireland and Wales (the latter since 1/1/2018).
- Ensure that all public sector procurers introduce a yellow/red card system: if lead contractors do not pay their supply chains within 30 days (as already required under the Procurement Reform (Scotland) Act 2014) they should be barred from bidding for public sector works for a period of at least 2 years (this already applies in Northern Ireland).