UK: The Labour Front Bench Business Team has referred to the abuse linked to the practice of cash retentions in the construction industry as “scandalous”.
Speaking on behalf of the Labour Business Team, Bill Esterson MP said he was appalled by the statistics recently released as part of the research carried out by the Department for Business, Energy and Industrial Strategy. “Over a three year period the industry – primarily SMEs – has lost £700m worth of retention monies because of upstream insolvencies. This works out at almost £20m per month, £4.5m per week and £900,000 per working day,” he said.
“For an industry to regularly haemorrhage this amount of cash is truly shocking. It amounts to a massive drag on a key sector which, at the same time, is being encouraged by this government to invest in cutting-edge digital and manufacturing technologies.”
Bill Esterson was speaking following the news that Peter Aldous MP has laid a private member’s bill to require all cash retentions to be lodged in a retention deposit scheme. The first reading of this Bill will be on 9 January 2018.
Professor Rudi Klein, CEO of the Specialist Engineering Contractors’ (SEC) Group, which has been campaigning over many years for statutory protection of retention monies, said he was delighted with the emerging support from all parties for this measure.
“There is now a real urgency to address this issue in light of the precarious financial position of some of the top UK contractors,” he said. “If any one of these was to fail thousands of SMEs will lose their retentions and, in the process, many will not be able to survive.”