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MPs move to scrap retention clauses

OVER ONE hundred MPs last week supported a Commons Early Day Motion to scrap retention clauses in public sector construction contracts.

Specialist contractors body the Constructors Liaison Group (CLG), which has lobbied MPs over the issue, estimates that around £3bn is withheld from construction firms at any one time by public sector clients.

Retention clauses common in 'traditional' contracts generally allow 5% of the contract sum to be witheld for a period to cover snagging costs in the event of a dispute between contractor and client after completion. These can often equal a contractor's margin.

'The government and the public sector have taken on the mantle of best practice client, but persist with this symbol of adversarial contracting, ' said CLG legal adviser Rudi Klein, vowing to widen the campaign.

However, in a written parliamentary reply in March, construction minister Nick Raynsford ruled out abolition of the retention system in public contracts.

The Conservatives have pledged to scrap the controversial IR35 tax which has hit selfemployed workers using limited companies to reduce tax liabilities.

They promised to introduce new laws to prevent tax abuse while protecting legitimate self employed contractors and professionals.

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