Retentions Bill presented to Parliament
10 January 2018
Draft legislation that aims to reform the controversial practice of payment retentions in construction was formally launched in the House of Commons this week.
The Bill, which was introduced under the Parliamentary ‘Ten Minute Rule’ by Conservative MP Peter Aldous, had its first reading on 9 January. The Bill was developed in close conjunction with the BESA and ECA, and is backed by over 20 other trade bodies.
Presenting his Bill to the Commons, Peter Aldous referred to the support provided by the ECA and BESA during his speech.
Mr. Aldous mentioned ECA in his Commons address, noting: “The abuse of retentions has a negative, knock-on domino effect that cascades through the construction industry. It restricts investment in new equipment and facilities. It prevents firms from taking on more work, and discourages them from employing more people and investing in apprenticeships. The Electrical Contractors’ Association has commented that ‘Smaller businesses can’t invest enough in skills or equipment, or help to improve industry productivity, if their cash flow is restricted in this way.’”
The Bill passed its first reading in the Commons and goes on to its second reading on 27 April.
Watch the bill being presented to Parliament here >
The Bill attracted cross-party support with the full permitted complement of 12 ‘sponsoring’ MPs including Sir Henry Bellingham (Conservative); Barry Sheerman (Labour); Caroline Lucas (Green Party); and Alan Brown (SNP).
The ‘Aldous Bill’ seeks to amend the 1996 Construction Act to ensure retention money is held in a deposit protection scheme – thus ending the issue of upstream insolvency and the working capital it takes from the industry and SMEs.
The Bill does not seek to abolish retentions, but to addresses the problem that the money is not protected from upstream insolvencies or even buyer abuse, which led to £700m being entirely lost to SMEs in the same three-year period.
ECA Director of Business Paul Reeve told journalists who attended a press conference on the Aldous Bill that “The growing contrast between the push for a modern, digital and productive construction industry, and the everyday reality for exposed supply chains is staggering.”
He added: “Small businesses can only be the engine room for construction growth and innovation if they can invest with confidence. That means retention monies should be put in trust at the earliest opportunity, and ECA urges the industry to support the Bill being put forward to achieve this.”