‘Aldous Bill’ proposes to hold retentions in government-approved deposit schemes

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Proposed legislation aiming to reform the practice of retentions in the construction industry has been revealed.

The bill, which is being introduced under the ‘Ten Minute Rule’ by Conservative MP Peter Aldous (pictured), will have its first reading in parliament today.

It does not propose to abolish retentions, but to address the issue that this money is not protected from upstream insolvencies by holding all funds in government-approved retention deposit scheme.

Aldous said: “There is a perfect logic in retentions but the system is being abused.”

The proposal has attracted cross-party support with the full permitted complement of 12 sponsor MPs. This includes Sir Henry Bellingham (Conservative); Barry Sheerman (Labour); Caroline Lucas (Green Party); and Alan Brown (SNP).

The ‘Aldous Bill’ seeks to amend the 1996 Construction Act to ensure retention money is held in a deposit protection scheme – thus ending the issue of upstream insolvency and the working capital it takes from the industry and SMEs.

The average UK contractor has £27,500 withheld per year in retentions, which limits their ability to invest in apprentices; upskill existing employees; and improve productivity and quality. More than £10.5bn of SME’s potential working capital is locked up in retentions every year and £7.8bn was unpaid in the past three years.

In a survey carried out on behalf of the Department of Business, Energy & Industrial Strategy, 48% would invest in new equipment and facilities, 40% said they would look to take on more work, 29% would employ more apprentices and 22% would allocate the money to taking on their first apprentice.

Aldous developed the bill in conjunction with the Building Engineering Services Association (BESA), the Electrical Contractors’ Association (ECA) and the Specialist Engineering Contractors’ (SEC) Group. It is also supported by the Federation of Master Builders, the House Builders Federation and more than 20 other trade bodies.

Aldous will propose a date for the second reading in parliament today.