In a report based on the findings of the survey, the SEC Group has condemned such practices as downright abuse, and will be meeting with audit authorities throughout the UK in an effort to outlaw such misuse.
The research involved circulation of a questionnaire among 420 local authorities in the UK. The total estimated construction spend of the 77 organisations that responded to the survey was some £1.26 billion.
The findings support the view that most local authorities throughout England, Scotland, Wales and Northern Ireland remain committed to the use of retention clauses in construction contracts.
However, 17 of the 62 English respondents either did not use retentions on all of their contracts or would be phasing them out over the next two years. A further eight claimed that they would be eliminating retentions over a similar period.
“I am encouraged that there is significant evidence that some local authorities have plans to eliminate or reduce their use of retentions,” said Rudi Klein, chief executive of the SEC Group. But he added that the vast majority were “hanging on to this adversarial practice”.
“It is intolerable that local authorities should use retention monies in order to boost their reserves or to finance other activities,” said Klein. “They should be holding them in a separate trust account for the protection of subcontractors who often lose their retention monies as a result of main contractor insolvency.”
The report is being forwarded to various government offices.
Source
Electrical and Mechanical Contractor
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