Overdue review on retentions due to be published shortly

Stuart McDonald MP

Stuart McDonald MP.

Scottish National Party (SNP) MP Stuart McDonald has urged the government to reveal how they are going to deal with cash retentions, a recurring issue for the construction supplying chain.

“What is the Government’s policy on the non-release or late release of cash retentions in the construction industry?” the member for Cumbernauld, Kilsyth and Kirkintilloch East asked the Department of Business, Energy and Industrial Strategy (BEIS).

His question was supported by Labour MP for Chesterfield, Toby Perkins.

BEIS minister for small business Margot James said the government’s long overdue review on retentions will be published shortly and will consider, together with the Construction Act review, actions, including ring-fencing of retentions.

She said: “Unjustified late and non-payment of a retention payment or any amount owed is unacceptable. These practices cause particular problems for small businesses in the construction sector, and the Government are committed to tackling them.”

Prior to the general election this month, another SNP MP, Alan Brown, pressed the Government to provide a solution to retentions issue.

“The problem has been known about for around 50 years, and I was able to get cross-party support for a private Member’s Bill on the issue in the previous Parliament,” the member for Kilmarnock and Loudoun said. “I even had support from the DUP, so perhaps it really is something that should be brought to the table. If we want to increase productivity and have more efficient infrastructure, it really would be an easy start.” 

In February, the Specialist Engineering Contractors’ (SEC) Group claimed that over £1bn in cash retentions are held by the UK’s top construction companies from their SME sub-contractors.

SEC Group CEO Rudi Klein said: “After many years of SEC Group campaigning on this issue it seems that we are now making progress towards protecting cash retentions. This has to be the road map to enabling construction SMEs to grow and innovate.”