Scottish government to consult on cash retentions

In the wake of a massive campaign by the Specialist Engineering Contractors’ Group (SEC Group) in Scotland the Scottish Government has announced an industry-wide consultation on the use of cash retentions in construction.

The consultation comes after a review of the system of cash retentions carried out by consultants Pye Tait for the Scottish government.  Cash retentions are deducted from due payments, ostensibly as security in case a firm fails to return to remedy non-compliant work.

In practice the monies – which belong to the firms from whom they have been withheld – are used to bolster the cashflow of large companies and even many public sector bodies such as local authorities.  Various estimates put the loss of cash retentions the Carillion collapse as between £¼ billion and £½billion.

SEC Group Scotland has been carrying out extensive lobbying amongst members of the Scottish Parliament to encourage them to support legislation to ring-fence the monies.

Speaking on behalf of SEC Group Scotland its National Executive Officer Alan Wilson said that all firms in Scotland’s construction industry will be encouraged to participate in the consultation. He added:“Our message is clear.  Cash retentions must be put in a ring-fenced account or scheme.  In this way we are more likely to see the end of a 200 year old practice which has been abused to the detriment of small firms which often wait years to get their retentions released.”

SEC Group Scotland has reminded the Scottish government that a recommendation in a 2013 review of public sector construction was to the effect that cash retentions should be kept in trust.

The closing date for the consultation will be 25 March 2020.