I read with great interest the letter from Roger Coonie of ATLAS on retentions (‘Use your vote’, EMC, Feb 2004). As an ECA member I, with Rudi Klein and John Nelson of the SEC Group and my MP Claire Curtis Thomas, recently met with Paul Boateng, chief secretary to the Treasury.

The main reason I attended was to put the case for small and medium-sized enterprises (sme) in respect of retentions. I told the chief secretary that my views on come from the front line and running a medium-sized electrical business for the last 33 years.

I referred to my personal concerns over the abuse of retentions, particularly in the time and effort spent by my firm in chasing my own money and the negative impact this has on cashflow and working capital.

We also pointed out the impact on SMEs of insolvencies higher up the supply chain, the latest example being the demise of Ballast UK. The sum of £31.1 million remained owing to trade contractors, but almost half of this amount (£14.9 million) consisted of outstanding retentions.

Having expressed our concerns, we told the chief secretary that the industry must keep moving forward and build on the progress made so far on phasing out retentions in public sector contracts. The SEC Group has taken the initiative and proposed that a joint government/industry task force be established. Our proposed remit for the task force covers:

  • putting in place immediate measures to provide SMEs with greater protection from insolvencies of upstream payers and to help reduce retention abuse, for example by the ring-fencing of retentions to reduce exposure to insolvency risks; and for supply chain members to recover their retentions on satisfactory completion of work;
  • monitoring progress in removing retentions on government projects and overcoming obstacles to such progress. Also to support the Office of Government Commerce to achieve its target of defect-free construction by 2005 on 70% of projects by volume.

Finally, on the political issue that Roger Coonie raised. May I suggest that all associations that represent subcontractors engaged in the building industry do as the ECA has done: request all members send a letter to their own local MPs, bringing to their attention the problems we all face in respect of the retentions issue. This will raise the profile of our problems with the very people that can have the most influence in legislating against the current abuses.