ECA and BESA join forces to submit retentions plan to GovernmentNews
Posted by: electime 14th February 2018
Following the collapse of Carillion last month, an action plan has been put forward to the Government by leading engineering services bodies, the BESA and ECA, to lay the issue of cash retention in construction to rest.
The BESA and ECA’s submission includes a request for the Government to put retentions in trust as a key first step, with the Peter Aldous Bill seen as a suitable legislative vehicle. This would then be a stepping stone on an industry roadmap to full abolition of retentions in the near future.
The submission includes results from a 2017 survey, which reveals that 92 per cent of respondents said they have faced construction retentions during the last three years, with two-thirds of current contracts involving retentions. Over half faced total retentions of over £100,000 against current contracts;
Many respondents wait an extra six months longer to get their retention monies than the typical 12 months defect liability period. The average amount of monies held over the past three years, which has not been paid back after the completion date and is thus outstanding, is £34,826.
ECA Director of Business Paul Reeve commented: “Prompt and fair payment is essential for industry collaboration, increased productivity and investment. Putting retentions in trust is vital to making early progress with protecting and supporting SMEs. Looking forward, it would help the industry not just to survive, but to modernize and deliver on the new sector deal”.
BESA Director of Legal and Commercial Rob Driscoll commented: “The Government’s Industrial Strategy relies on an engineering services sector which has both the capability and capacity to continue to deliver against UK demand. Recent events have shone a spotlight on just how critical prompt and fair payment is to ensure a financially healthy, innovative and productive sector best achieved through a move away from the use of retentions.”
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