Trade associations clash over cash retentions
Build UK, the Civil Engineering Contractors Association and the Construction Products Association have come out against supporting the Aldous Bill which is seeking to protect cash retentions by ring fencing them in a separate protected bank account. For Build UK the move has been made against the wishes of some of some of its largest members, including BESA, ECA and FIS, who all support the Aldous Bill.
In a letter to Andrew Griffiths, Secretary of State for Business, Energy and Industrial Strategy, Build UK chief executive Suzannah Nichol said: “Whilst there is unanimous support for the abolition of retention we have not reached a consensus on a retention deposit scheme. For this reason, the following organisations are not able to support the Bill: Build UK; Civil Engineering Contractors Association; Chartered Institute of Credit Management and the Construction Products Association.”
Build UK supports the abolition of retentions by 2023 but there are no firm legislative plans for this to happen.
Carillion’s latest accounts showed it was sitting on £800 million of subcontractors’ money being held in retentions. The Aldous Bill is aimed at protecting subcontractors’ money should a main contractor become insolvent.
Professor Rudi Klein, chief executive at SEC Group, said: “The majority of their members will be appalled that these groups are not supporting a bill that will protect their cash retentions, in the rather vain hope that sometime over the next seven years legislation will appear, as if by magic, to abolish retentions altogether.”
Brian Berry, chief executive at the Federation of Master Builders, said: “The eventual abolition of retentions is an ideal goal but the question is: are major contractors serious about getting there? The FMB has supported the Aldous Bill because we want action now.”
Last month David Frise, the FIS chief executive and new chief executive at BESA, said: “The urgent need for reform is clear from the cross-party support the Aldous Bill has. The impact from lost Carillion retention money on apprentices, jobs and investment in the sector is already evident. Holding cash retentions in trust will make sure that the money is safe and does what it is intended to do.”
Build UK was formed out of the merger of the UK Contractors Group, which represented main contractors, and the National Specialist Contractors Council. It claims to represent 40 per cent of the construction industry from clients and tier one contractors to specialists and trade bodies.
The Construction (Retention Deposit Schemes) Bill, known as the Aldous Bill, will have its second reading on 15 June. The Bill stipulates that, unless the monies are protected, any clause in a construction contract enabling the deduction of cash retentions, will be invalid. Cash retentions will have to be safeguarded within a retention deposit scheme. The Bill will apply to the whole of the UK.
The number of MPs supporting the Bill has grown to 130 and 78 trade bodies support the Bill including 20 members of Build UK.