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Second reading of retentions bill pushed back to June

MP Peter Aldous will now seek to build further industry consensus to pressure government to back new law requiring third-party deposits to be used for all cash retentions

A second reading in parliament of a bill that would mandate the use of accredited third-party deposit schemes to hold cash retentions has been postponed until June 15 after originally being scheduled for this week.

It is understood that the postponement of the reading, due to be held tomorrow, had been anticipated as a possibility by individuals involved with the development of the bill.

However, key backers have insisted that their focus remains on expanding support and momentum within the industry and parliament that has been built up in recent months to push for full government support to reform retentions. Despite the delay, the bill’s backers argue that parliamentary readings of the bill, serve as an important focus point to build awareness of industry concerns about current retentions management across the industry.

The Construction (Retention Deposit Schemes) Bill was introduced to parliament by MP Peter Aldous in January via the Ten-Minute Rule Bill and has been backed by a number of industry bodies and MPs as a means to tackle decades of concerns about the misuse of retentions.

Introduction of the proposed legislation occurred just a week before the formal announcement of Carillion entering liquidation, which created significant uncertainty over overdue payments still owed by the group and job security across the construction supply chain.

In this environment, supporters of the bill expect further potential opportunities in the coming months to introduce new rules on retentions as part of a wider overhaul of legislation.

An independent review of UK building regulations launched following the Grenfell Tower fire currently being overseen by Dame Judith Hackitt is one potential mechanism that could result in significant changes across industry including payment reform.

Groups such as BESA, the ECA and the SEC Group, which help developed the bill, have cited concerns over the collapse of Carillion as an important factor in driving support from the wider construction supply chain to tackle late payments, particularly in the case of money held in retentions.

Marching on Downing Street

In leading a delegation to 10 Downing Street on Monday (April 23) to deliver a petition to Prime Minister Theresa May urging the government to ensure a fairer system of payments and retentions, Mr Aldous argued there was now an unprecedented industry coalition supporting reform.

He said, “This is an unprecedented opportunity to improve the industry for the better, level the playing field for SMEs and protect thousands and thousands of jobs. Construction is an essential underpinning of our lives and work, and we need to support the industry and especially SMEs to ensure future growth and prosperity.”

“The industry loses around £1m for each working day, mostly from SMEs. There have been proposals to stop the abuse of retentions before, but this time there is the largest coalition on fair payments ever.”

Over 355,000 companies and self-employed professionals working across the construction industry are said to have signed the petition. These organisations represent house builders, roofers and scaffolding companies, as well heating and plumbing specialists, according to BESA.

Mr Aldous said before delivering the petition that the bill’s supporters would need to build the case to convince government of the need for retentions reform as a means to improve productive and ensure the construction industry would be more resilient and dynamic.

He said that a key argument also needed to be made about bringing UK regulation on payment protections and retentions in line with the rest of the world.

With parliament’s time limited throughout the year to debate Private Member’s Bills, which include the proposed legislation on retentions, Mr Aldous said the readings were an important means to generate awareness and debate in parliament, but not the only means of changing the law.

He added, “We have got to give an extra push to convince the government to bring this forward.”

Mr Aldous was joined in Downing Street by a range of key industry figures including FSB national chair Mike Cherry, FMB chief executive Brian Berry, the director general of the Institute of Directors Stephen Martin and ECA CEO Steve Bratt.

The delegation also included BESA chief executive David Frise, who argued that an ongoing failure to legislate against retentions misuse and delayed payments was putting thousands of companies and skilled workers at risk.

He said, “The government will surely want to be seen to protect SMEs and to ensure the construction industry is sustainable so it can deliver its ambitious plans for housing and social welfare. SMEs are crucial to the government’s built environment and infrastructure programme.”

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