Research by the Specialist Engineering Contractors’ Group Scotland has found that the withholding of retentions has a significant impact on the way businesses operate and that more than two thirds of businesses support the introduction of a deposit scheme.
The analysis of the results – now with the Scottish Government for consideration established that 77% of the respondents stated that that late release of retentions was a very significant/fairly significant issue;
The research established that 82% of respondents stated non-payment of retentions (often due to upstream insolvencies) was a very/fairly significant issue. The total median estimated cost of pursuing late release of (and unpaid) retentions was £2,500 per respondent – which is a burden for small firms;
From the survey 66% of respondents were in favour of a retentions deposit scheme or trust fund to protect the monies.
The overwhelming majority of respondents agreed that the practice of retentions has been associated with considerable abuse to the detriment of SMEs.
The Scottish Government is setting up a working group to progress matters but Alan Wilson, SEC Group Scotland’s National Executive Officer, said “For the last the years we have been working on a solution to help inform a statutory retentions deposit scheme. This work has been carried out in conjunction with insurers, banking experts, software developers and academia. Over the fullness of time we expect that putting retentions out of reach of the abusers will help end the practice and, in the meantime, we can develop an insurance solution for clients.”