The chair of the All-Party Parliamentary Group (APPG) on Built Environment Quality has urged the government to replace construction’s “outdated” retention payment system.
Jo Churchill, Conservative MP for Bury St Edmunds, also called on the industry to contribute suggestions to the government retention consultation, which ends on 19 January 2018.
Earlier in the week, 23 trade associations and professional bodies representing mostly small and medium-sized businesses signed an open letter calling for a change to the current retentions system.
Churchill, who was finance director for scaffolding contractor SLS before entering parliament, said: “Throughout my career, I have been calling for the government to review and modernise retention payments. There is, in my opinion, now a pressing argument to replace the outdated and outmoded system that is currently in place with one that affords all parties involved greater transparency, security and stability.
“I believe that a scheme similar to the tenancy deposit scheme would be beneficial. This sees a third-party group take charge of repayment of the deposit, protecting both tenant and landlord, or main and subcontractor in a building deposit scheme.
The letter from the 23 trade bodies said: “Some £10.5bn of the overall construction sector turnover of £220bn is held in retentions by clients and main contractors from small and medium-sized businesses down the supply chain. An estimated £7.8bn in retentions has been unpaid in the construction sector over the last three years, and in the same period £700m of retentions were lost due to upstream insolvencies.
“Poor payment practices in construction affect productivity, innovation and investment, holding back the sector’s overall capacity to do business and invest in the workforce.
“There is, though, a simple way to reform the system. Regulations should specify that retentions must be held in a statutory retention deposit scheme (rather than in clients’ own bank accounts), an approach which is already being used successfully in Australia.
“We believe that there is no longer any reason to stick with the status quo, or for this issue to be potentially kicked again into the long grass.”
The 23 signatories were:
- ECA, electrotechnical and engineering services trade body – Paul Reeve, director of business;
- Building Engineering Services Association (BESA) – Rob Driscoll, director of legal & commercial;
- SEC Group – Trevor Hursthouse OBE, chairman;
- British Constructional Steelwork Association (BCSA) – Sarah McCann-Bartlett, director general;
- Lift and Escalator Industry Association (LEIA) – Nick Mellor, managing director;
- SELECT – Alan Wilson, director of communications;
- National Federation of Builders – Richard Beresford, chief executive;
- Association of Plumbing and Heating Contractors (APHC) – John Thompson, CEO;
- Scottish & Northern Ireland Plumbing Employers’ Federation (SNIPEF) – Fiona Hodgson, chief executive;
- Contract Flooring Association – Richard Catt, CEO;
- Structural Timber Association – Andrew Carpenter, chief executive;
- British Blind and Shutter Association – Andrew Chalk, director of operations;
- Confederation of Construction Specialists – Gerald Kelly, general manager;
- Federation of Traditional Metal Roofing Contractors (FTMRC) – Nigel Johnston, general manager
- Lead Contractors Association – Nigel Johnston, general manager;
- National Association of Shopfitters – Robert Hudson, director;
- National Federation of Demolition Contractors – Howard Button, CEO;
- Chartered Association of Building Engineers – Tony Ginda, membership development manager;
- Federation of Environmental Trade Associations (FETA) – Russell Beattie, chief executive;
- Scaffolding Association – Robert Candy, founder;
- Stone Federation Great Britain – Jane Buxey, chief executive;
- Glass & Glazing Federation – Phil Pluck, group chief executive;
- Finishes & Interiors Sector (FIS) – David Frise, CEO.
