Wilson bids to protect 'subbies' from rip-off
Finance Minister Sammy Wilson has accused big contractors of using sub-contractors "as banks" as he unveiled a new scheme to protect 'subbies' on government building contracts.
In an interview with Business Telegraph, the Minister said he was prompted to consider ways of protecting sub-contractors after dozens were left without payment in the collapse of Ballymena-based Patton Construction.
But he said the firms caught out by Patton's high-profile demise will not benefit from the new 'project back accounts' scheme because it is not retrospective and only applies to construction contracts awarded by the Central Procurement Directorate.
Many of the 'subbies' affected by the fall-out from Patton were also working on private sector work.
According to an administrators' report, suppliers, sub-contractors and banks will lose £63m in the Patton debacle.
Mr Wilson said some major contractors effectively used sub-contractors as a form of finance.
"We have had an increasing number of complaints around the Patton Group story of major contractors who were undertaking public sector works, getting money from public sector departments and then not paying sub-contractors on time and sometimes not at all."
When those main contractors go into administration, the sub-contractors are left with nothing, he said. "They are using sub-contractors as banks. There is plenty of evidence of it."
The project bank accounts will be introduced in government construction contracts worth £1m and over involving "a significant subcontracting element".
A bank account will be set up for a project which will pay out what is due to the main contractor and sub-contractors within five days or less after the client deposits the payment. Mr Wilson said the £60m tender to widen the A2 from Carrickfergus to Belfast would be affected by the new provision.
Up until now contractors have been paid first, making it their duty instead to pay sub-contractors after receiving overall payment from the client. The money will be held "in trust" for the supply chain, which will protect the funds in event of a main contractor going bust.
Mr Wilson said: "Project bank accounts will accelerate sub-contractors' cash-flow and give certainty of payment timing.
"They will also allow the benefits of public investment to be pushed further down the supply chain to sub-contractors who, in many cases are fundamental to the work on many construction contracts."