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Retentions campaign gathers pace

A campaign to change current practice on construction contract retentions is gathering momentum.

The Time for Change campaign, run by RAC’s sister magazine H&V News, aims to get 100,000 signatures on the government’s e-petition site, which guarantees a parliamentary hearing.

The practice of major contractors withholding cash from their specialist subcontractors until the finish of a project has been a point of contention in construction for decades.

It has seen significant sums withheld from the subcontractors, risking cashflow problems for the specialists, which are often smaller companies. But to date, while successive governments have considered the issue, all have fallen short of eliminating it in law.

The Time for Change campaign from H&V News has already won the backing of a raft of industry associations including the B&ES, SEC Group, BEAMA and FETA.

The e-petition proposes that legislation should be introduced requiring all funds identified as retentions within construction industry project contracts be placed in a trust fund in future.

This will ensure that these funds are protected and guaranteed to be paid to recipients at the appropriate time.

The move would place the UK in line with other countries, including France, Germany, the US and Australia. By establishing a legal framework whereby all retention monies are held in a ringfenced trust fund many of the current difficulties experienced by construction industry contractors will be avoided in the future.

Proposer, H&V News editor Dennis Flower said: “Retentions are estimated to account for billions of pounds in the construction sector and many companies report that the lack of protection has resulted in these sums being lost or delayed, causing serious issues for those affected.”

Individuals and companies in the building services industry are urged to both sign the e-petition at http://epetitions.direct.gov.uk/petitions/71753 and to raise the issue with their own MPs and Chambers of Commerce. If the petition gets 100,000 signatures by the time online petitions close at the end of March, the issue is guaranteed to be debated in Parliament.

Meanwhile, the Department for Business, Innovation & Skills (BIS) has asked for the industry’s views on its proposals to help create responsible payment practices.

Minister of state for business, enterprise and energy Matthew Hancock said: “Getting this new legislation right is an economic growth issue and builds upon our work to build a responsible payment culture for business.

This action on transparency is part of a broad range of action we are taking to tackle late payment: statutory, through public procurement, and through culture change.

“As someone with a small business background myself, I know first-hand just how big an issue late payment is.”

According to the consultation, as of July 2014 the overall level of late payment owed to small and medium-sized businesses was a total of £39.4bn, with £38,2001 the average amount owed to a single company.

The document argues that late payment must be tackled if businesses are to flourish and grow.

To take part in the consultation visit: https://www.gov.uk/government/consultations/business-payment-practices-and-policies-duty-to-report

How you can get involved

  • Sign the e-petition
  • Contact your MP and ask them to support the initiative
  • Follow H&V News on Twitter using the #Time4Change hashtag to keep up to date with the campaign
  • Join the conversation on H&V News’s LinkedIn site to let them know how you’ve been affected by retentions and to hear other people’s stories

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