Debbie Abrahams, Labour MP for Oldham East and Saddleworth, hosted a cross-party meeting in Parliament to address the issue of retentions.
Retentions is the withholding of payment until the completion of a job – a practice rife in the construction industry often resulting in smaller companies losing money.
Creator of the award winning Be Fair – Pay on Time campaign, set up to highlight the effects of late payments on small and medium-sized enterprises, Ms Abrahams said: “I hosted the meeting for MPs so the Specialist Engineering Contractors’ Group could brief them on the progress of the two amendments they have tabled for the Enterprise Bill in the House of Lords. Their amendments are designed to tackle this much-hated and damaging system of retentions.”
Ms Abrahams – who was the first MP to raise the issue of retentions in a parliamentary debate and tabled amendments to address retentions to the Small Business Bill in the last Parliament – also chaired the meeting and was joined by several MPs including Bill Esterson, a member of the shadow front bench team dealing with the Enterprise Bill, and Mark Pawsey, parliamentary private secretary to minister for small business Anna Soubry.
SEC Group chief executive Rudi Klein said: “There was a general consensus at the meeting that the issue of retentions is a cross-party issue.
“I firmly believe that best way to get rid of this unfair and outdated practice of retentions in the construction industry is to put them out of reach of those withholding them by putting the money into a trust and that’s what our amendments set out to achieve.
After the meeting, which took place on Tuesday 3 November, Ms Abrahams said: “I have several examples of companies contacting me to say how retention money was withheld from them, typically 5% of the overall contract, for months and months at a time.
“There is evidence that cash retentions have been used to shore up the working capital of local authorities and Tier 1 suppliers, and that’s very worrying.
“There is a key concern that if Tier 1 suppliers become insolvent, the small businesses in the supply chain are at risk of losing their retentions.
“We tell small and medium-sized enterprises they are the backbone of our economy and key to our recovery, so it’s time we started to do more to protect them from inappropriate late payment tactics from bigger businesses.”
Ms Abrahams won the Gold Award at this year’s H&V News Awards for her work on retentions.
H&V News will be holding our second live Twitter debate on late payment on Friday 13 November between noon and 13:00.