The SEC Group, the ECA, BESA, British Constructional Steelwork Association, Lift and Escalator Industry Association, National Association of Shopfitters, Scottish Building Federation, Electrical Contractors Association of Scotland, and the Scottish and Northern Ireland Plumbing Employers’ Federation, believe this is an opportunity for the industry to move swiftly where there is agreement.
Richard Beresford, chief executive of the NFB said: “While there may be justifications for retentions, abuse across both the public and private sectors saps the supply chain of much-needed cash flow. This has a negative effect on the overall health of the construction industry.”
Robert Hudson, chief executive of the National Association of Shopfitters, said: “This obscenity perpetuated by tier one contractors has been allowed to go on unabated for far too long, starving the supply chain of much needed cash to invest in training and apprenticeships.”
Vaughan Hart, managing director of the Scottish Building Federation added: “The size and scale of the insolvency of Carillion has brought the issue of retentions in the construction industry into sharp focus. However, it should be borne in mind that the majority of the retention monies withheld do not sit in the hands of main contractors, but remain with their clients. If retention monies have been released by the client on a project and not issued to the supply chain, this practice should be outlawed.
“The abolition of retentions is something that SBF would welcome, but in the absence of such an undertaking, the implementation of trust schemes for retention monies, or, more significantly, better rules governing the defect liability period and process, should be considered to ensure that the main contractor is held accountable to manage the defect rectification process in an efficient and timely manner. The supply chain must be afforded better protection.”
SEC Group chief executive Rudi Klein said: “We must never be placed in a position again where thousands of firms have lost their retentions – monies they legally own – because of large insolvencies up the supply chain.”
Almost £1 billion in retentions have been lost as a result of Carillion’s liquidation, and the NFB is keen not to waste this opportunity to place the entire supply chain on a more sustainable footing.