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Delayed second hearing of retentions reform bill set for March 8

Key building services bodies have said that the heads of 15 parliamentary committees have now shown support for proposed legislation that would ringfence cash retentions 

A second reading of a bill that would legally mandate the ringfencing of cash retentions is currently scheduled for March 8 with supporters claiming that the chairs of 15 influential select committees are among parliamentarians to have now expressed support.

The Construction (Retention Deposit Schemes) Bill was introduced to parliament by MP Peter Aldous in January 2018 with a second scheduled reading having faced several delays over the last twelve months. 

Proposals in the bill, which was introduced via the parliamentary procedure of the ten-minute rule, seek to enforce use of accredited third-party deposit schemes for holding and managing retentions.  The proposals have been devised with the cooperation of a range of industry bodies such as BESA, the ECA and the SEC Group.

Debbie Petford, BESA’s legal head, noted that the collapse of construction giant Carillion in the same month that the Aldous bill was introduced to parliament has had a catastrophic impact on smaller contractors working in the building services sector.  She argued that these impacts were still being felt in the building services industry supply chain.

BESA and a number of industry bodies have been campaigning and lobbying MPs over the last twelve months to back reforms within the Aldous Bill to try and tackle concerns about the loss of retentions, such as those still owed by Carillion after it entered administration last year.

Both BESA and the ECA have said that the heads of multiple parliamentary committees that oversee scrutiny of government policy, including the work of the Treasury, business sector and public accounts, have expressed backing for retentions reform.  This list includes MPs from the country’s four largest political parties that also make up the majority of parliament’s Liaison Committee that holds the prime minister to account and can recommend topics for debate in the House of Commons.

Ms Petford added, “We welcome this vast level of cross party support which highlights the continuing importance of a legislative solution to the issue of retentions.”

While no formal legislative commitment to tackle retentions has been put forward by government, BESA and the ECA have said they are committed to continue to push for legislation in order to address the issue of reforming retentions.

Rob Driscoll, deputy director of business policy and practice said, “This level of support from the most senior politicians in the country highlights the significance of this issue, and importantly shows that there is a ready-made solution available.”

Payment reforms

MP Debbie Abrahams earlier this month used the Ten-Minute Rule Bill to put forward proposals to parliament on requiring the use of shared project bank accounts to better protect and manage cashflow and retentions for industries such as the construction sector.

Ms Abrahams said at the time that late payments from larger businesses had led to billions of pounds in payments owed to companies in sectors such as the building services industry to be lost.

Parliament’s Business, Energy and Industrial Strategy (BEIS) Committee late last year urged the government to bring forward proposals to introduce mandatory project bank accounts with a mechanism to independently release cash retentions owed to contractors.

A report published at the time by the committee looking at small businesses and productivity was critical of existing efforts to combat both late payments and the abuse of existing retentions systems. This was seen as a particular concern in light of the collapse of Carillion and the negative financial impacts of building services specialists still owed money by the now defunct group.

Key building services bodies have said that the heads of 15 parliamentary committees have now shown support for proposed legislation that would ringfence cash retentions

 

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