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Industry leaders back retentions petition to PM

Flickr/ Images Money

Industry leaders representing 333,000 companies presented a fair payment and retentions petition to Number 10 Downing Street. 

The presentation came ahead of the second hearing of the Aldous Bill in the House of Commons on Friday. The bill, which was published in full for the first time on Monday, proposes the introduction of retentions deposit schemes. 

It was introduced to parliament by Conservative MP Peter Aldous on 9 January, six days before the collapse of construction giant Carillion. Experts have said that Carillion, which was a ”notorious late payer” according to the Federation of Small Businesses (FSB), could have held up to £800M in retentions when it entered compulsory liquidation on 15 January.

“This is an unprecedented opportunity to improve the industry for the better, level the playing field for SMEs and protect thousands and thousands of jobs,” Aldous said.

“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 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.”

Speaking before the presentation FSB national chairman Mike Cherry said: “As Carillion’s liquidation showed, smaller contractors can be hugely and unfairly hit by the collapse of a bigger firm which hired them going bust and leaving them out of pocket. It defies natural justice that a contractor which completes a job and does it well can be left exposed in this way.

“Withheld retentions were originally intended as security in case a firm doesn’t return to rectify non-complying work. In modern practice, they are withheld to boost the cash flow of the party withholding them. 

“The proposal to hold retentions in trust would be a sensible way to prevent this from happening and protect small hard-working businesses in the supply chain against a Carillion-style financial demise.”

Calls for payment practice reform have increased in the months following the collapse, and the Aldous Bill has been supported by more than 100 MPs. 

Specialist Engineering Contractors Group chief executive Rudi Klein said: “We know that ministers are sympathetic towards the bill but, at this stage, the government must issue a robust public statement of support for the bill.”

The petition was delivered to Prime Minister Theresa May on Monday by a group including Cherry, Federation of Master Builders chief executive Brian Berry, Institute of Directors director general Stephen Martin, Electrical Contractors Association chief executive Steve Bratt and Building Engineering Services Association chief executive David Frise. 

 

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