The Federation of Environmental Trade Associations (FETA) has welcomed the first reading of a new retentions bill in parliament.
The ‘Aldous Bill’ has been introduced by Conservative MP for Waveney Peter Aldous, and has received cross-party support from 12 sponsoring MPs. The bill was developed in conjunction with the Building Engineering Services Association (BESA) and the Electrical Contractors’ Association (ECA). It seeks to amend the 1996 Construction Act to ensure retention money is held in a deposit protection scheme – thus ending the issue of upstream insolvency and the working capital it takes from the industry and SMEs.
An estimated £10.5 billion of the overall construction sector turnover of £220 billion is held in retentions by clients and main contractors from small and medium-sized businesses down the supply chain. Around £7.8 billion in retentions has been unpaid in the construction sector over the last three years, and in the same period £700 million of retentions were lost due to upstream insolvencies.
Russell Beattie, Chief Executive of FETA, said: “We have fully supported this initiative. Retention payments are a deeply contentious matter for many of our members and the fact this bill has received support across parliament suggests it is beginning to gain the attention it warrants.
"FETA will continue to work alongside other trade associations to ensure the reform reaches a satisfactory conclusion for all parties. In parallel to this bill, the Government currently has a consultation running on payment practices in the construction industry and we remain convinced that legislation is the only way forward as relying simply on voluntary improvements is no more likely to succeed now than it has in the past.”
The bill is also supported by the Federation of Master Builders (FMB), the Specialist Engineering Contractors’ (SEC) Group and more than 20 other trade bodies. It does not seek to abolish retentions completely, but to address the fact that this money is not protected from upstream insolvencies.