Influential Parliamentary Group Backs Industry Retentions Call

The All Party Parliamentary Building Services Engineering Group (APPBSEG) has added its voice to the construction industry’s endorsement of the Olympic Delivery Authority’s (ODA) decision to remove retentions for first tier contractors.

There has been significant reaction to the decision from influential individuals such as of Lord O'Neill of Clackmannan. Now the APPBSEG is calling on the Government to take note of these views and the views of some of the industry’s more progressive clients.

The building services industry has been lobbying for many years for the removal of retentions. The removal of retentions was acknowledged by the House of Commons’ Trade & Industry Committee as best business practice. Retentions abuse was one of the reasons that led Gordon Brown, then Chancellor, to announce a review of the Construction Act in 2004. The Construction Act has not yet been changed to tighten up the payment provisions, meaning that the ODA is to be applauded for leading the way on this issue.

Claire Curtis-Thomas MP, Chair of APPBSEG, commented:

“I am extremely pleased that a number of commentators and clients have endorsed this positive step. Retentions have been recognised by many organisations as an archaic system of ensuring quality. Systems such as project bank accounts and integrated teams as well as greater emphasis on selecting competent firms (rather than lowest price selection) must be encouraged.”

Claire Curtis-Thomas is now preparing to ask Parliamentary Questions of the new Financial Secretary to the Treasury, Stephen Timms, and the new Construction Minister, to force greater progress on eliminating retentions on government works.

Clive Dickin, CEO of the Association of Plumbing and Heating Contractors (APHC), added:

“I am excited to see high profile clients now taking this step forward and am pleased for all small and medium sized contractors who can now have certainty of complete payment for projects. Currently, many businesses within the plumbing and heating sector inflate total project costs to ensure profitability of projects. The removal of retentions is in the best interests of clients, lead contractors and all specialist contractors.”

Rudi Klein, Chief Executive of the SEC Group, concluded:

“Reform within the construction sector, including the adoption of best payment practice, is essential. The total saving to the taxpayer, as recognised by the National Audit Office, is approximately £2.6bn. Without question, the Government must now get a move on to end this bad practice that discourages collaborative working. The ODA has led the way – now let’s see the rest of the public sector follow.”

Published: 06 August 2007

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