National Housing Bank urged to use digital accounts for supply chain protection

The news

Nine sector leaders wrote to housing secretary Steve Reed on 27 May urging that cash from the National Housing Bank be held in digital accounts. The letter, led by Finishes and Interiors Sector chief executive Iain McIlwee, warned that poor payment practices are driving insolvency rates up. They argued that resistance to digital accounts based on administrative or cost burden is no longer credible. The bank opened at the end of March and will use up to £16bn in loans, equity and guarantees to accelerate delivery of 500,000 homes.

What's at stake

The National Housing Bank sits under Homes England and aims to attract around £53bn of private investment into residential development. It will work with housebuilders, developers, investors and registered providers. Subcontractors in the supply chain have faced repeated risks from late payment and main contractor insolvency. The Small Business Protections Bill already proposes banning retentions after a two-year transition period. Construction leaders say linking development lending to digital wallets would separate and protect cash from insolvency risk.

The case for

Digital accounts would reduce supplier failures by separating project funds from main contractors' general accounts. This separation limits the chance that money intended for subcontractors is lost if a main contractor becomes insolvent. Keeping projects on schedule would follow, as fewer supplier collapses would reduce delays and re-tendering costs. The approach mirrors existing calls to protect public funds through dedicated digital structures rather than relying on conventional payment chains.

The case against

Mandatory digital accounts would introduce new administrative processes and potential costs for developers and lenders using the National Housing Bank. These requirements could slow the pace at which funds are deployed and homes are delivered. The bank was created to accelerate housebuilding, and additional bureaucracy risks offsetting the intended speed gains from the £16bn facility.

Why it matters now

The National Housing Bank is already operating and the sector letter sets out an immediate design choice for its lending terms. If digital accounts are adopted, future loans would carry supply-chain protection conditions. If they are not, the existing payment chain remains unchanged until the Small Business Protections Bill takes effect after its two-year transition.

Further reading

constructionnews.co.uk

Have your say

This is a live referendum on Refnation. Cast your vote →

Want to follow more questions like this? Sign in or create an account.