The government published a consultation paper on the issue of cash retentions in the construction industry last month, along with research that it had commissioned to support policy proposals.
That research, carried out by consultants Pye Tait for the Department of Business, Energy & Industrial Strategy (BEIS), revealed that almost 拢700m worth of cash retention had been lost in construction by reason of insolvencies over a three-year period.
The Specialist Engineering Contractors鈥� (SEC) Group described the figure as 鈥渟hocking鈥� and said that it was far in excess of its own estimates.
SEC Group chief executive Rudi Klein said that this sum justified legislation to ring-fence retention monies. 鈥淭he bulk of these monies will have been lost by SMEs,鈥� he said. 鈥淭hey legally belong to the firms from whom the monies were withheld; consent to the withholding of the monies did not extend to their being used to pay off the insolvent party鈥檚 creditors. This represents a scandalous and continuing drain on the scarce resources of SMEs in the construction industry.鈥�
SEC Group has been campaigning for all cash retentions to be deposited with independently run retention deposit schemes.
Rudi Klein added: 鈥淕iven the dire finances of some of the UK鈥檚 largest construction companies it is even more urgent that parliamentary time is secured for legislation to protect retention monies.鈥�
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