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Retention protection bill first reading

09 January 2018

Peter Aldous MP will present the first reading of the Construction (Retention Deposit Schemes) Bill under a 10 Minute Rule Motion within the House of Commons today.

Mr Aldous met members of the trade press at a special event in Westminster yesterday, organised by the Building Engineering Services Association (BESA) SEC Group and the ECA, all of which had representatives in attendance.

It was confirmed that the Bill has cross-party support from a total of 12 MPs, with no opposition recorded to date.

Further assistance in drafting the Bill has also been provided by the three associations, speeding its preparation and saving time.

The preparation would have needed to have been completed by civil servants.

In addition to MPs, the Bill has also received the backing of around 30 trade associations.

The aim of the bill is to see retention funds placed in ring-fenced accounts, to avoid these being lost, similar to the scheme that has proved highly successful for landlords and tenants in the private sector.

It will require any organisation that includes a retention clause in its contract to place the retention funds in a separate account and inform the members of the supply of chain of the details.

Adopting this process will avoid retention funds being lost when companies higher up the supply chain go out of business.

This method is currently used by other countries including the US, Canada, Australia, New Zealand and others.

If successful, the new Bill will see the culmination of many years of effort by a number of individuals and trade associations.

SEC Group chief executive officer Professor Rudi Klein recalled that the Parliamentary campaign began over 15 years ago.

Retentions were described by the House of Commons Trade and Industry Committee as "unfair" and "outdated".

"We now believe that this latest Private Member's Bill has a good chance of being properly debated given the extent of cross-party support for the Bill," said Professor Klein.

"We must succeed because the industry is losing almost £1m worth of retentions each working day because of insolvencies.

"This does not take account of the millions of pounds lost by way of the costs associated with waiting years for the release of the monies and chasing up the monies," he said.

BESA legal and commercial director Rob Driscoll said the Bill will provide "a solution that will help all parties involved in construction by stabilising and securing cash-flow - including main contractors and clients.

"The fact that it has attracted support from right across the House proves that politicians recognise that SMEs are the lifeblood of construction and FM.

"They represent a £212bn economic contribution and their delivery enables a further £597bn worth of economic output," he said.

Those supporting the Bill include MPs such as Sir Henry Bellingham (Conservative), Barry Sherman (Labour), Caroline Lucas (Green Party) and Alan Brown (SNP).

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