{"id":72614,"date":"2020-02-28T12:51:40","date_gmt":"2020-02-28T12:51:40","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=72614"},"modified":"2020-02-28T12:51:40","modified_gmt":"2020-02-28T12:51:40","slug":"construction-sector-abuse","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/construction-sector-abuse\/72614\/","title":{"rendered":"Construction sector urged to take action on retention abuse"},"content":{"rendered":"<h2>Businesses that have been affected by the abuse of retention payments in the construction sector have been urged to get in touch with their local MP ahead of renewed political debate<\/h2>\n<p class=\"p1\"><span class=\"s1\">Scottish MP Alan Brown yesterday (27 February) called on the <a href=\"https:\/\/www.gov.uk\/\" target=\"_blank\" rel=\"noopener noreferrer\">UK government<\/a> to set a timetable to bring an end to the current retention system, which has cost construction SME&#8217;s hundreds of millions since it was first debated more than four years ago.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Firms affected by the abuse of <a href=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/wrong-with-retention\/52757\/\" target=\"_blank\" rel=\"noopener noreferrer\">retention payments in the construction industry<\/a> have been urged to get in touch with their local MP ahead of renewed political debate on this damaging industry practice.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">The <a href=\"https:\/\/www.snp.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">SNP<\/a> representative for Kilmarnock and Louden used a Westminster Hall Debate to update fellow ministers on work already taking place within the industry to set up a more equitable alternative to the current system. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">This would create a retention deposit scheme that would ring-fence retention monies from the cash held by contractors further up the supply chain.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">SMEs regularly report late release or non-payment of cash retentions, which is a source of frustration across the industry. In addition, these monies are always at risk of not being paid if there is insolvency further up the supply chain.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">The news has been welcomed by <a href=\"https:\/\/www.snipef.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">SNIPEF<\/a>, Scotland and Northern Ireland\u2019s trade body for plumbing and heating professionals, which is encouraging its members who have been affected by this to get their local MPs involved.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">According to consultants <a href=\"https:\/\/www.pyetait.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Pye Tait<\/a> \u2013 who produced a report on this matter for the <a href=\"https:\/\/www.gov.uk\/government\/organisations\/department-for-business-energy-and-industrial-strategy\" target=\"_blank\" rel=\"noopener noreferrer\">Department of Business, Energy &amp; Industrial Strategy<\/a> (BEIS) \u2013 the UK\u2019s construction SMEs lost an estimated \u00a3670m in retention monies to the insolvencies of upstream contractors between the first Westminster Hall Debate on this matter in January 2016 and October 2017, when Pye Tait submitted its report.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">That figure does not include the massive amounts lost following the January 2018 collapse of Carillion. Industry estimates have put the value of lost retentions from Carillion at between \u00a3250m and \u00a3500m.<\/span><\/p>\n<h3>A <span class=\"s1\">campaign for legislation<\/span><\/h3>\n<p class=\"p1\"><span class=\"s1\"><a href=\"https:\/\/secgroup.org.uk\/\" target=\"_blank\" rel=\"noopener noreferrer\">SEC Group<\/a> has<\/span><span class=\"s1\">\u00a0been running a long-running campaign for legislation to bring an end to <a href=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/late-payments-in-construction-2\/71481\/\" target=\"_blank\" rel=\"noopener noreferrer\">late payments<\/a>, mandate the use of project bank accounts and protect cash retentions.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Industry bodies including the SEC Group, the <a href=\"https:\/\/www.builders.org.uk\/home\/\" target=\"_blank\" rel=\"noopener noreferrer\">National Federation of Builders<\/a>, the <a href=\"https:\/\/www.fmb.org.uk\/\" target=\"_blank\" rel=\"noopener noreferrer\">Federation of Master Builders<\/a> and the <a href=\"https:\/\/www.feta.co.uk\/\" target=\"_blank\" rel=\"noopener noreferrer\">Federation of Environmental Trade Associations<\/a> \u2013 as well as one of the UK\u2019s major Tier 1 contractors \u2013 have been working with banking experts, insurers and software developers to put together an IT platform as a digital solution to ring-fencing cash retentions.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Support for this working scheme would help protect the \u00a34.8bn of retentions that are annually outstanding, most of which are due to SMEs that would benefit from greater financial stability that would strengthen the construction sector as a whole.<\/span><\/p>\n<h3 class=\"p1\"><span class=\"s1\">Focus on reaching a resolution<\/span><\/h3>\n<p class=\"p1\"><span class=\"s1\">Fiona Hodgson, chief executive of SNIPEF, said: \u201cAlan Brown\u2019s efforts to secure this Westminster Hall Debate is a positive step forward, as it gives our members and indeed all SMEs in the construction sector an opportunity to push for a resolution to this damaging industry practice.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">\u201cAfter years of discussions and consultations, it\u2019s now time to do something about this problem. Setting out a timetable would certainly focus minds on reaching a resolution sooner rather than later.\u201d<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Rudi Klein, chief executive of the Specialist Engineering Contractors\u2019 (SEC) Group, added: \u201cOnly in construction are SMEs powerless to protect their money. Construction SMEs will tell you that the current system puts their business at risk while seeing their money being used to support the working capital of those whose balance sheets are in negative territory.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">\u201cSo while government remains undecided, small firms continue to lose their retentions, which could instead be used to grow their business and train more people. This is not sustainable which is why we campaign for the system to change \u2013 insolvencies in construction are currently running at their highest since the recession.\u201d<\/span><\/p>\n<div class=\"mk-custom-module-container\">\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Firms that have been affected by the abuse of retention payments in the construction industry have been urged to get in touch with their local MP ahead of renewed political debate.<\/p>\n","protected":false},"author":20,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[676,283,276,621,701],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-72614","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-planning-construction-news","7":"tag-construction","8":"tag-finance","9":"tag-government","10":"tag-sme","11":"tag-supply-chain"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v26.9) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Construction sector urged to take action on retention abuse<\/title>\n<meta name=\"description\" content=\"Businesses that have been affected by the abuse of retention payments in construction have been urged to get in touch with their local MP\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/construction-sector-abuse\/72614\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Construction sector urged to take action on abuse of retention payments\" \/>\n<meta property=\"og:description\" content=\"Firms that have been affected by the abuse of retention payments in the construction industry have been urged to get in touch with their local MP ahead of renewed political debate.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/construction-sector-abuse\/72614\/\" \/>\n<meta property=\"og:site_name\" content=\"Planning, Building &amp; 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