Debbie hosts cross-party ‘retentions’ meeting in Parliament 

I hosted a cross party meeting in Parliament to address the issue of ‘retentions’ , the withholding of payment until the completion of a job which is a practice rife in the construction industry often resulting in smaller companies losing money.

As my campaign Be Fair – Pay On Time was set up to highlight the effects of late payments on small and medium enterprises, I hosted the meeting for MPs so the Specialist Engineering Contractors’ (SEC) Group could brief them on the progress of the two amendments they have tabled for the Enterprise Bill in the House of Lords. Their amendments are designed to tackle this much hated and damaging system of retentions.

I was the first MP to raise the issue of retentions in a Parliamentary debate and I tabled amendments to address retentions to the Small Business Bill in the last Parliament . I also chaired the meeting and was joined by several MPs including Bill Esterson MP, a member of the Shadow Front Bench team dealing with the Enterprise Bill, and Mark Pawsey MP, Parliamentary Private Secretary to Anna Soubry, the Minister for Small Business.

IMG_9616Rudi Klein, CEO of the SEC Group said: “There was a general consensus at the meeting that the issue of retentions is a cross-party issue. I firmly believe that best way to get rid of this unfair and outdated practice of retentions in the construction industry is to put them out of reach of those withholding them by putting the money into a trust and that’s what our amendments set out to achieve.”

I have several examples of companies contacting me to say how retention money was withheld from them, typically 5% of the overall contract, for months and months at a time.

There is evidence that cash retentions have been used to shore up the working capital of local authorities and tier 1 suppliers and that’s very worrying. There is a key concern that if tier 1 suppliers become insolvent, the small businesses in the supply chain are at risk of losing their retentions.

We tell small and medium enterprises they are the back bone of our economy, and key to our recovery, so it’s time we started to do more to protect them from inappropriate late payment tactics from bigger businesses.”

Rudi added: “Without wishing to be over optimistic the Enterprise Bill is the best chance, so far, to address the retention problem in our industry. Since the beginning of the recession at least £250m of retentions has been lost by small firms by reason of upstream insolvencies.”

Leave a Reply