Proposed parliamentary legislation designed to dramatically reform the controversial practice of payment retentions in the construction industry was formally unveiled at a House of Commons briefing today.<\/p>\n
The Bill, which is being introduced under the \u2018Ten Minute Rule\u2019 by Peter Aldous MP and will have its first reading in parliament tomorrow (January 9), has attracted cross-party support with the full permitted complement of 12 \u2018sponsoring\u2019 MPs including Sir Henry Bellingham (Conservative); Barry Sheerman (Labour); Caroline Lucas (Green Party); and Alan Brown (SNP).<\/p>\n
The \u2018Aldous Bill\u2019 seeks to amend the 1996 Construction Act to ensure retention money is held in a deposit protection scheme \u2013 thus ending the issue of upstream insolvency and the working capital it takes from the industry and SMEs. The average UK contractor has \u00a327,500 withheld per year in retentions, which limits their ability to invest in apprentices; upskill existing employees; and improve productivity and quality.<\/p>\n
Mr Aldous, along with a number of other sponsoring MPs, briefed the national and trade media about the contents of the Bill and explained the background, including the fact that more than \u00a310.5bn of SME\u2019s potential working capital is locked up in retentions every year and \u00a37.8bn was unpaid in the last three years.<\/p>\n
Insolvencies<\/strong><\/p>\n Mr Aldous developed his Bill in conjunction with the Building Engineering Services Association (BESA) and the Electrotechnical and Engineering Services trade body ECA. It is also supported by the Federation of Master Builders (FMB); the Specialist Engineering Contractors\u2019 (SEC) Group and more than 20 other trade bodies.<\/p>\n \u201cThis Bill provides a solution that will help all parties involved in construction by stabilising and securing cash-flow \u2013 including main contractors and clients,\u201d said BESA\u2019s Legal and Commercial Director Rob Driscoll.<\/p>\n \u201cThe fact that it has attracted support from right across the House proves that politicians recognise that SMEs are the lifeblood of construction and FM. They represent a \u00a3212bn economic contribution and their delivery enables a further \u00a3597bn worth of economic output.<\/p>\n \u201cThis is not an isolated issue. It goes right to the heart of the government\u2019s attempts to improve industrial productivity throughout the UK economy. Securing this cash would unlock the supply chain, enable growth, training and technological evolution, allowing the construction sector to step up its efforts to deliver vital infrastructure and housing projects,\u201d added Mr Driscoll.<\/p>\n \u201cThe growing contrast between the push for a modern, digital and productive construction industry, and the everyday reality for exposed supply chains is staggering,\u201d said ECA Director of Business Paul Reeve. \u201cWe must change the retentions system as soon as possible, to protect supply chains.<\/p>\n \u201cSmall 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,\u201d added Mr. Reeve.<\/p>\n BESA calculated that the amount withheld in retentions would enable the recruitment of around 3,000 new apprentices in the building engineering sector alone if it was released to the supply chain.<\/p>\n \u201cThere is nothing controversial about this Bill,\u201d said the ECA\u2019s Head of Public Affairs Mike Giles. \u201cWe are not arguing for the abolition of retentions at this stage, but simply for SMEs\u2019 money to be protected. This initiative comes at a time when a lot of companies are struggling with cash flow and the threat of insolvency.\u201d<\/p>\n When asked what they would do with retention money if it wasn\u2019t withheld or lost, 48% of contractors told a recent survey carried out on behalf of the Department of Business, Energy & Industrial Strategy (BEIS) that they would invest in new equipment and facilities. 40% said they would look to take on more work, 29% would employ more apprentices and 22% would allocate the money to taking on their first apprentice.<\/p>\n \u201cIt is clear from the widespread support for the Aldous Bill that politicians from right across the spectrum recognise the system of retentions has been abused,\u201d said BESA\u2019s Policy Co-ordinator Alexi Ozioro. \u201cReform is urgent before more companies go bust and the housing crisis reaches boiling point.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
\n<\/strong>The Bill does not seek to abolish retentions, but to address the fact that this money is not protected from upstream insolvencies, which led to \u00a3700m being entirely lost to SMEs in the same three-year period. This amounts to \u00a320m a month, \u00a34.5m a week or \u00a3640,000 per day.<\/p>\n