Building services body urges Scottish members to respond to new consultation that it hopes could lead to regulatory reforms across the UK to ringfence cash retentions
Devolved authorities in Scotland and Wales could set important precedents to introduce ringfenced cash retention schemes for private sector contracts to help tackle industry concerns about bad payment practice, industry body BESA has said.
The organisation has been among a number of groups in the building services sector to support proposed legislation during the previous parliament that would have made it mandatory to use third-party deposit schemes to hold retention payments for construction work.
A Private Member’s Bill was introduced to parliament by MP Peter Aldous shortly before Carillion entered liquidation two years ago in order to build parliamentary support for retentions reform. However, it only received a single reading in parliament as Brexit and other issues took precedent.
Debbie Petford, BESA’s director of legal and commercial, said that a recent committee hearing at the Welsh National Assembly and a consultation launched by the Scottish Government on retentions served as promising signs that both legislatures may introduce legal reforms. It is hope these would match provision in the bill introduced by Mr Aldous.
She said, “This would mean hardworking sub-contractors in Scotland and Wales could be protected from upstream insolvencies and systemic late or non-payment of money they are owed long before their English colleagues.”
‘The current consultation is a golden opportunity for Scotland to lead the rest of the UK in this sensible and urgently needed reform.”
Ms Petford said BESA was committed to reintroduce a bill into parliament for retention deposit schemes. This action was highlighted by BESA as being vital considering the limited progress made in parliament around retentions reform despite the second anniversary of Carillion’s collapse takes place this month,
BESA said it was now urging members in Scotland to take part in a Scottish Government consultation around the issue of cash retentions.
The organisation said it hoped that the Scottish Government’s response could lead to a landmark regulation being passed.
BESA said, “The consultation follows the Scottish Government’s commitment to review the use of retentions in Scotland’s construction supply chains, which are valued at around £124m annually. It decided to act because of growing evidence that this practice of holding back final payments from SME firms is widely abused by larger firms who use the money to boost their own profits.”