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Organisations representing some of the construction industry’s biggest contractors are calling on the government to abolish retentions.
Build UK, the Civil Engineering Contractor’s Association (CECA) and the Construction Products Association (CPA) have responded to the government Consultation on the practice of cash retention under construction contracts, which was submitted today.
They are calling for a joint approach of government legislation to abolish retentions, supported by the industry developing and implementing a phased road map, as the only way to achieve the cultural change needed on this issue.
The matter is particularly relevant with the ongoing crisis of Carillion going into liquidation, leaving an estimated 30,000 creditors, which are predominately small and medium-sized businesses.
The group state that in order for the government to deliver the UK’s ambitious infrastructure, housing and commercial needs it must introduce legislation to ensure there is zero cash retention within the industry by no later than 2025.
By doing so they believe there would be a number of positive outcomes for the industry, including:
- An increase in working capital within the supply chain to support investment, productivity and growth;
- Without the threat of unfair payment, there would be an incentive to improve quality of completed works on construction projects as well as increased assurance that any defects that did occur would be rectified appropriately;
- Increased collaboration and transparency in the construction industry by ensuring that any forms of security used against defects would be appropriate and proportionate.
Suzannah Nichol, chief executive at Build UK, said: “The collapse of Carillion has reinforced the need for significant change in the construction industry, and we urge government to take legislative action to abolish cash retention.
“The industry is ready to support this by implementing a phased approach to zero retention, in partnership with government.”
The CIOB is also backing the call for prompt and fair payment in the construction.
In a statement, the group, said: “The CIOB support the Build UK, Civil Engineering Contractors Association and Construction Products Association ambition to move towards zero cash retentions by the year 2025. There are clearly a number of significant benefits for the culture of the industry, its clients and stakeholders, which could be realised by removing retention.”
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