Main contractors call for end to retentions

Grant Prior 4 years ago
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Main contractors and clients  are backing the campaign to end retentions in construction.

Calls to abolish the hated system have been led by specialists.

Now the major players through their industry trade bodies are calling for change in the wake of Carillion’s collapse.

Build UK, the Civil Engineering Contractors Association and the Construction Products Association have added their voice to calls for reform.

Build UK also represents a growing number of clients.

A joint submission to ongoing government consultation said: “The industry is fully committed to achieving zero cash retention and we believe that Government must introduce legislation to ensure there is zero cash retention within the industry by no later than 2025.”

The trade bodies said abolition of retentions would mean:

    • An increase in working capital within the supply chain to support investment, productivity and growth;
    • Without the threat of unfair payment, there would be an incentive to improve quality of completed works on construction projects as well as increased assurance that any defects that did occur would be rectified appropriately; and
    • Increased collaboration and transparency in the construction industry by ensuring that any forms of security used against defects would be appropriate and proportionate.

Build UK Chief Executive Suzannah Nichol MBE said:“The collapse of Carillion has reinforced the need for significant change in the construction industry, and we urge Government to take legislative action to abolish cash retention.

“The industry is ready to support this by implementing a phased approach to zero retention, in partnership with Government.”

Alasdair Reisner, Chief Executive at CECA, added: “CECA has long supported the abolition of retentions.

“The use of improperly managed retentions by employers often has substantial impacts on SMEs further down the supply chain as these companies operate within extremely tight margins and reserves.

“Carillion’s collapse has highlighted once and for all how change is needed in our industry.

“As a first step, we call on Government to legislate to abolish cash retentions and work with industry to implement an agreed route map based approach to achieve this ambition.”

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