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Aldous launches retentions bill

08 January 2018

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.

The Bill, which is being introduced under the ‘Ten Minute Rule’ 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 ‘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 average UK contractor has £27,500 withheld per year in retentions, which limits their ability to invest in apprentices; upskill existing employees; and improve productivity and quality.

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 £700m being entirely lost to SMEs in the same three-year period.

Mr Aldous developed his Bill in conjunction with electrotechnical and engineering Sservices trade body ECA and the Building Engineering Services Association (BESA). It is also supported by the Federation of Master Builders (FMB); the Specialist Engineering Contractors’ (SEC) Group and more than 20 other trade bodies.

“The growing contrast between the push for a modern, digital and productive construction industry, and the everyday reality for exposed supply chains is staggering,” said ECA Director of Business Paul Reeve. “We must change the retentions system as soon as possible, to protect supply chains.

“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,” added Mr. Reeve.

“This Bill provides a solution that will help all parties involved in construction by stabilising and securing cash-flow – including main contractors and clients,” added BESA’s Legal and Commercial Director Rob Driscoll.