Contractors are being urged by the Constructors Liaison Group to make a stand and join the fight to abolish the practice of holding retentions as the current amount held reaches £3 billion.
The Constructors Liaison Group (CLG) is stepping up its campaign to abolish retentions. It has called on contractors to lobby their local MPs to support the Early Day Motion 428.

The Motion calls for central and local government clients – who account for 40% of the spend in the construction industry – to set an example and move away from the adversarial practice and take immediate steps to abolish retentions.

It is estimated that £3 billion is currently locked up in retentions. According to the latest research from the Building Services Research and Information Association (BSRIA), some £470 million of this is attributable to m&e work. This equates to 3% of m&e contractors' turnover.

The majority of money is typically held back in retention for six months to two years, but 0·5% is being kept from contractors for as long as three years. For firms with over 20 staff, BSRIA found, it is common for retention funds to be held for between one and two years.

The practice has a damaging effect on the profitability and competitiveness of contractors, particularly the small to medium-sized firms. BSRIA reports that for 50 companies surveyed, the money held in retentions is equivalent to 77% of their average 4·2% profit margin. For firms with ten or less staff, 93% of the individual retentions are valued at under £1000. A disproportionately high value of resources is needed to recover these funds.

ECA director, David Pollock says: "Our members are often in the front line of the retentions battle...Many clients abuse the system by deliberately withholding payment of the retention percentage in order to massage their own cash flow to the detriment of those to whom the money is due."

The Early Day Motion is backed by Labour MP for Crosby, Claire Curtis Thomas. ECA members, along with the members of the CLG's other 30 trade bodies, are being urged to make a concerted effort to persuade MPs to support the motion.