The devolved government of Wales has announced it is to use project bank accounts (PBAs) from 1st January 2018 on all building projects over £2 million procured by government bodies.

Mark Drakeford, Welsh cabinet secretary for finance, said the decision was made to protect the supply chain from payment abuse and collapse of main contractors.

All Welsh public sector bodies have been told to “use project bank accounts where appropriate” and are being encouraged to use the revised and updated project bank account procurement advice note and implementation guidance.

The policy has been welcomed by various construction industry bodies, which have been lobbying for them to be widely adopted across the UK.

Cat Griffith Williams, national executive officer for Specialist Engineering Contractors’ (SEC) Group Wales/Cymru Wales, said: “Poor payment practices are the biggest killer of productivity and growth in Welsh construction. PBAs will help curb abuse and thus enable small firms to deliver to their full potential.”

Michelle Davies, from the Electrical Contractors’ Association, said: “Welsh government is to be congratulated. Dealing with poor payment practices has to be the number one priority for construction. I look forward to the time when we can half the threshold for using PBAs.”

Rudi Klein, chief executive of the SEC Group, added: “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.”

SEC Group Wales has produced guidance for construction clients, 12 Easy Steps in Setting up a Project Bank Account.