Minister says retention deposit scheme is one option to tackle cash retentions crisis

The Minister for Business and Industry has confirmed that a retention deposit scheme is one of several policy options are under consideration to tackle the abuse of cash retentions. The announcement came as MPs from all parties debated cash retentions and asked the Construction Minister to act now and not kick the issue into the long grass.

Alan Brown MP (Kilmarnock and Loudoun, SNP), who initiated  a Westminster Hall debate on the use of cash retentions in the construction industry, referred to previous debates and commitments by past Ministers before asking Government to “take hold of this situation”.

Nadhim Zahawi MP, Minister for Business & Industry, said in his response to MPs that the Government has recognised the need to tackle the issue which he described as “complex”. He added: “Any changes would need to be implemented correctly and require consistent support from industry.” He also confirmed that several policy options are under consideration, “including the retention deposit scheme.”

Peter Aldous MP (Waveney, Conservative) referred to the seminal report from  Sir Michael Latham in the 1990s: “Unfortunately, one of Sir Michael’s recommendations remains outstanding and has never been implemented. That relates to cash retentions being retained in a secure trust fund. Two and a half decades on, we really should now be putting right that glaring omission. It is a scar that has blighted and held back the construction industry for many years and caused personal anguish and distress to the proprietors and staff of many businesses.”

Bill Esterson MP (Sefton Central, Labour) referred to retentions as a ‘crime’ and added: “Retentions are applied unfairly and disproportionately in the supply chain. It is a crime that that has been allowed to continue.”

SEC Group Chairman Trevor Hursthouse OBE commented on the debate: “I am encouraged by the Minister’s commitment to reform the system and his assurances that status quo is not an option, but we still do not know when or what the Government intends to do and whether they support protection of our monies with legislation and the power of public procurement.”

SEC Group– representing the largest value sector in UK construction – has highlighted for years the abuse of cash retentions in construction and campaigned for their protection under a statutory deposit scheme. Together with over 80 Trade Associations, SEC Group supported the Peter Aldous Bill [the Construction (Retention Deposit Schemes) Bill] which proposed statutory protection of retentions in a Government-approved deposit scheme.