The number of cross-party MPs supporting a construction retentions reform bill has soared since Carillion collapsed in January, six days after the first reading of the Aldous Bill which seeks to place retentions into independently held protection schemes
More than 100 MPs including defence secretary Gavin Williamson, shadow chancellor John McDonnell, Liberal Democrat leader Vince Cable and Green Party leader Caroline Lucas support the bill, according to the Building Engineering Services Association (BESA).
Designed to provide security for cash retentions against insolvencies of parties up the supply chain through the introduction of retention deposit schemes, the proposal was first heard in parliament six days before Carillion entered compulsory liquidation on 15 January.
However, the collapse of the construction giant has brought the issue of retention payments into the spotlight.
Electrical Contractors Association director of business Paul Reeve said: “Carillion’s collapse highlighted serious supply chain and procurement problems in construction, which need an urgent remedy.”
In the aftermath of Carillion’s liquidation trade bodies Build UK, the Civil Engineering Contractors Association (CECA) and the Construction Products Association (CPA) estimated that the failed contractor held some £800m in retentions when it went bust.
A survey of 137 BESA and CECA members displayed the average retention is 5% of money payable to subcontractors. This exceeds many supply chain profit margins. The survey also shows that 92% of respondents had faced construction retentions in the last three years.
Conservative MP Peter Aldous – who first introduced the bill – said: “Industry support for reform to outdated payment systems is at unprecedented levels, for which I am very grateful. Construction is an essential underpinning of our lives and work, and we need to support the industry and especially SMEs to ensure future growth and prosperity.
“The petition being presented represents over 330,000 businesses and there are over 100 of my Parliamentary colleagues that support reform to the practice of cash retentions.
“We have a golden opportunity to improve the industry for the better, level the playing field for SMEs and protect thousands and thousands of jobs.”
He concluded: “The industry loses around £1m for each working day, mostly from SMEs. There have been proposals to stop the abuse of retentions before, but this time there is the largest coalition on fair payments ever.”
David Frise, CEO of BESA said: “The urgent need for reform is clear from the cross-party support the Aldous Bill has. The impact from lost Carillion retention money on apprentices, jobs and investment in the sector is already evident. Holding cash retentions in trust will make sure that the money is safe and does what it is intended to do.”
