Jack Sargeant MS, Minister for Culture, Skills and Social Partnership
The public bodies listed in the Social Partnership and Public Procurement (Wales) Act 2023 will be required to either include clauses in their construction contracts and ensure these are implemented and passed through supply chains, or notify Welsh Ministers explaining why they have not done so.
The clauses will require project money to be held in Project Bank Accounts (PBAs). These accounts are trust-protected and speed up supply chain payments to around 3-5 days instead of weeks. PBAs also help protect funds if a main contractor becomes insolvent. Retentions, or money held in reserve to address defects, must also be secured in ring-fenced accounts.
These new clauses will benefit smaller contractors in particular who would otherwise often face funding and cash flow problems due to late payments and insolvencies.
The clauses will also require plans to boost employment and training opportunities, ensure compliance with employment law, create more sub-contracting opportunities for SMEs, and support environmental protection.
If you are involved in public construction contracts, as a client, contractor or sub-contractor, I encourage you to respond to the consultation and to prepare for these new requirements coming into force early next year.