{"id":538562,"date":"2026-02-19T12:45:01","date_gmt":"2026-02-19T12:45:01","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=538562"},"modified":"2026-02-19T17:03:46","modified_gmt":"2026-02-19T17:03:46","slug":"two-tier-pbas-touted-to-solve-payment-related-mental-health-issues","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/health-and-safety\/mind-matters\/two-tier-pbas-touted-to-solve-payment-related-mental-health-issues-19-02-2026\/","title":{"rendered":"Two-tier PBAs touted to solve payment-related mental health issues"},"content":{"rendered":"

Ringfenced project bank accounts (PBAs) should be extended throughout the construction supply chain to \u201celiminate\u201d payment-related mental health issues, a white paper has argued.<\/span><\/p>\n

A two-tier PBA system would offer not only financial but also psychological protection to small and medium-sized construction businesses that are the backbone of the industry,<\/span> Marc Preston<\/span><\/a> says in <\/span>Unlocking the action plan for better mental health in UK construction<\/span><\/i>.<\/span><\/p>\n

Preston, who is chief executive of New Foundation Counselling, a qualified surveyor and director of Construction Dispute Experts, calls for such a two-tier system to be introduced by the middle of next year.<\/span><\/p>\n

\u201cThis is an effective approach that works through existing JCT [Joint Contracts Tribunal] arrangements and can eliminate<\/span> mental ill health caused by late payments or anxiety over payment structures<\/span><\/a>,\u201d he says.<\/span><\/p>\n

As a solution to the problem of \u201clate and uncertain payment\u201d \u2013 a long-standing stress point for contractors \u2013 Preston\u2019s proposed system would include a top tier with PBA provisions within a JCT contract, and the \u201caddition of a new subcontractor bank account subordinate to the main account\u201d.<\/span><\/p>\n

This second-tier PBA would operate in the same way as the top level, \u201cenabling tier three and four sub-subcontractors to be paid soon after the subcontractor has received payment funds\u201d, Preston says.<\/span><\/p>\n

He recommends that each subcontractor sets up its own PBA to provide payments to their own subcontractors, with a short delay from when the subcontractor receives payment from the main contractor.<\/span><\/p>\n

\u201cThis would mean that tier three contractors are paid within 28 days of their application for payment,\u201d his white paper says.<\/span><\/p>\n

\u201cIt is recommended that the maximum period for payment to reach lower tier subcontractors \u2013 tier four and self-employed [sole traders] \u2013 be restricted to 42 days.\u201d<\/span><\/p>\n

Large UK contractors are already required by law to report on payment practices every six months.<\/span><\/p>\n

But as Preston points out, the regulations only apply to firms with an annual turnover greater than \u00a354m, total assets of more than \u00a327m and more than 250 staff as of 6 April 2025.<\/span><\/p>\n

Only a small percentage of firms meet these criteria.<\/span><\/p>\n

\u201cOf the 364,514 registered construction firms operating across the UK, 98 per cent employ [fewer] than 24 people,\u201d Preston notes. \u201cOnly 618 have a turnover of more than \u00a350m.\u201d<\/span><\/p>\n

A 60-day payment period is permitted \u201cif fair\u201d under existing regulations, he adds.<\/span><\/p>\n

\u201cIn my view, it can never be considered fair if this payment length extends the time taken to pay the bottom of the supply chain to 120 days.\u201d<\/span><\/p>\n

The scale of the issue was underlined by an analysis released today (19 February) by Funding Circle, which specialises in loans to SMEs.<\/span><\/p>\n

It revealed that construction businesses are more exposed than those in any other sector, with more than 2,100 firms estimated to have closed in 2024 due to delayed payments.<\/span><\/p>\n

The two-tier PBA is one of 28 calls for action in Preston’s white paper, which include:<\/span><\/p>\n