Senior MP to introduce bill to hold retentions in trust
05 December 2017
A forthcoming parliamentary Bill on retentions, to be introduced by Peter Aldous MP, will be backed by the electrotechnical and engineering services body ECA and the Building Engineering Services Association (BESA).
The Ten Minute Rule Bill will seek to amend the 1996 Construction Act and ensure that retentions within construction are held in a third party trust scheme. A key aim will be to help protect companies in the construction supply chain from insolvency and payment uncertainly. The first reading of the Bill in Parliament will be on January 9th.
Both bodies jointly endorse the Bill, and will fully support it through its progress in Parliament. In addition, ECA and the BESA anticipate significant additional political and industry support for the Bill.
Recent research by Pye Tait on retentions has shown that over £700m worth of retention money has been lost due to upstream insolvency in the past three years and that on average £27,500 is held in retention per contractor. In an industry of 280,000 SMEs, 44 per cent of contractors have suffered non-payment through upstream insolvency in the last three years.
Paul Reeve, Director of Business & External Affairs at the ECA:
“This Bill aims to protect the supply chain from the serious impact of lost retentions due to upstream insolvency. Way beyond those companies who are damaged by upstream insolvency, even the possibility of losing retention money in this way hampers small business investment and growth. As such, this Bill is entirely consistent with the aims of the new Industrial Strategy, which looks for innovation, and investment in skills”.
Rob Driscoll, Legal & Commercial Director at the BESA:
“With central government and major projects the biggest single construction client, the case for reform is inherently connected to the Government’s industrial strategy. To meet the challenges set by the recently launched Industrial Strategy and construction sector deal, enabling industry to re-invest in jobs, training, innovation and technological transformation, Government intervention is necessary to secure working capital that underpins the delivery models for the industry as a whole.”
The Bill will be introduced while the government consults over reforming the current retentions model. The government consultation runs until 19 January 2018.
Peter Aldous has been MP for Waveney since 2010. He has previously been a member of the Environmental Audit Committee, and is a longstanding champion of SMEs in industry.