With a second reading of a bill that would make it mandatory to hold retentions in third party schemes set for October, the industry body expects further support from MPs to push for change
BESA and MP Peter Aldous have claimed that over 200 MPs have expressed an intention to support a bill introduced into parliament earlier this year to make it mandatory to ringfence cash retentions.
The organisation is among a number of trade associations to be pushing for drastic payments reforms. These calls have intensified since the collapse of construction giant Carillion occurred just a week after the Construction (Retention Deposit Schemes) Bill was given a first reading in parliament.
Mr Aldous, who introduced the proposed legislation as a Private Member’s Bill, said he was encouraged by support in parliament, and the wider construction industry.
He said, “There is more work to be done in persuading government to adopt the bill, but I am confident that vital momentum is being gained, showing the appetite within parliament for the Aldous Bill to succeed.”
A second reading of the legislation, which would make it mandatory for retentions to be held in a third party accredited deposit programme to protect against issues such as upstream insolvency, has been delayed several times since parliament first discussed the proposals in January.
MPs will now be able to discuss retentions reform on October 26, with organisations pledging to push for increased parliamentary support and even formal government backing to ensure change to existing legislation. The nature of a Private Member’s Bill means that is not guaranteed that any proposed legislation discussed will be voted on by parliament to be passed into law.
MP Maria Caulfield, who BESA said is the 200th parliamentarian to offer to back the proposed legislation, said that reforming cash retentions was a vital means of protecting small businesses in the construction sector.
She said, “I have constituents that were impacted by Carillion, even my father and my husband work in the building trade, so I am all too aware of late payment and the issues with cash retentions.”
Labour MP James Frith, who has also expressed support for the bill, said regulatory reform was vital after Carillion announced it was entering administration.
He added, “That wasted millions of pounds of public money, halted building schools and hospitals and cost thousands of jobs, putting SMEs at risk [and] having to bear the brunt of a puffed up failed outsourcing company.”
BESA public affairs and policy manager Alexi Ozioro argued that he now expected more MPs to pledge backing to the bill after the high profile failings at Carillion.
He added, “Carillion put late payments in the public view and we have grown a campaign that 76 Conservatives and MPs from every other party all back. We have a great opportunity for industry unity and to finally solve a problem that has plagued the industry, economy and SMEs for far too long.”
While the government has expressed an intent to try and curb poor industry practice, specifically around late payments in the supply chain, a formal commitment to legislate against retentions abuse has not been brought forward.
However, parliament’s Public Accounts Committee (PAC) last month called for Whitehall to hold discussions with SMEs over how to best reform contracts to tackle payment issues linked to public sector contracts.
PAC chair MP Meg Hillier said that a committee report into the state of public sector procurement of key construction and building services contracts following Carillion’s collapse further highlighted ongoing weaknesses in how government obtains vital services.
She cited Carillion’s collapse earlier this year as having “sharpened” the committee’s focus on how government manages over £100m worth of contracts with strategic suppliers.
Ms Hillier said at the time, “There are many areas in which the Cabinet Office can drive compliance across departments—not least turning its proposed ‘playbook’ of guidelines, rules and principles for contracting into a set of mandatory requirements.”