All tier 1 contractors and tier 2 subcontractors will become automatic beneficiaries on new contracts.

Project Bank Accounts (PBA) were first introduced in 2012 to ensure monies are held in trust in the event of lead contractor insolvency.

National Highways payments are made down to tier 2 level in 18 days on average – well ahead of industry norms.

Lloyd Biddell, Head of Cost Intelligence at National Highways said: “We have been using project bank accounts for over a decade and they have proven a great benefit to many of our suppliers.

“The current opt-in process can make the process daunting or confusing for our smallest suppliers, who are often the ones most likely to benefit from them. We are now making it even easier by automatically including them on project bank accounts unless they choose to opt out.

“This is a significant and game changing development and we believe could even be a world first for project bank accounts.”

Leading payment campaigner Professor Rudi Klein said: “PBAs are the most effective mechanism for improving payment security. National Highways’ achievement in ensuring 18-days payments to its supply chains is now providing a massive boost for SMEs current facing unprecedented cost pressures.

“If you’re involved in a public sector contract and not using PBAs, what’s stopping you?”

Historically around 80% of tier 2 contractors have signed up, with over 2,000 applications processed by National Highways each year and over 50 such accounts active at any one time.

The remaining 20% are usually very small suppliers that provide limited supply or are unsure of the benefits.

Under the new plans, they will be signed up unless they specifically request to opt out to make the signing up process easier and better protect suppliers against further lead contractor insolvencies.