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First reading of Aldous Bill to protect cash retentions – industry speaks out

The First Reading of the Construction (Retention Deposit Schemes) Bill took place in the House of Commons this week.  The Bill was introduced by Peter Aldous MP and has 11 sponsors drawn from all parties.

MP Peter Aldous, BESA president Tim Hopkinson, BESA’s legal & commercial director Rob Driscoll and SEC Group’s CEO, Professor Rudi Klein

 

The Specialist Engineering Contractors’ (SEC) Group has stated that this is the latest stage in a long-running campaign to tackle the abuse associated with the practice of cash retentions in the construction industry.

SEC Group’s CEO, Professor Rudi Klein, said that the Parliamentary campaign began over 15 years ago with the (then) Trade and Industry Committee in the House of Commons being persuaded to launch an inquiry into the practice.  The Committee declared the practice to be “unfair” and “outdated”.

Professor Klein added: “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.  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.”

Firms in SEC Group’s member associations and in other trade associations including the Building Engineering Services Association (BESA) and the Electrical Contractors Association (ECA) have been carrying out an extensive lobbying campaign to garner support for the Bill.

At a briefing about the Bill this week, MP Peter Aldous told journalists that Tier 2 and 3 SMEs were in effect “actively providing working capital” for those higher up the supply chain.

“If SMEs have debt it is a disincentive for them to take on more work, create more work and more opportunities. For this reason what we are proposing is a deposit scheme which will put more velocity of cash in the system.

“The time is ripe right now to address this issue,” Mr Aldous said, adding “there is a housing crisis that needs to be addressed and to do that the construction industry needs to be in top gear. The talking has to stop and we have to get on with the doing.”

Also in attendance was BESA president Tim Hopkinson, who himself runs an SME. He said: “The pain that SMEs have felt for many years is insurmountable. The importance of this Bill must not be underestimated. For BESA members to have certainty of cash is vitally important. Not just for us as member companies and operating entities but equally for the industry as a whole. We have to have a construction industry that can work properly.”

Paul Reeve, director of business with the Electrical Contractors Association (ECA) said: “Anyone who knows anything about doing business in any sector will know that cash flow means everything. Protection of the supply chain so that it knows where its money is coming from and it will be paid is absolutely vital.”

Rob Driscoll, BESA’s legal & commercial director said: “The Bill represents a keystone in industry being enabled by government to meet its industrial strategic objectives. We have housing and infrastructure requirements in this industry and to achieve these we need a stable construction and FM industry. The significance of what this Bill is doing in terms of mutual security of cash is a real keystone and we thank Peter for taking this initiative.”

Meawhile a Nottinghamshire SME, A1Flue Systems has welcomed the proposed Bill which it believes could pave the way to it recouping more than £750,000.

The Ollerton-based company’s director, TJ Duncan Moir, is delighted that the proposed ‘Aldous Bill’ might finally help to stop an issue that blights the industry and has put some firms out of business.

“We’re delighted that Peter Aldous MP’s bill is being introduced under the Ten Minute Rule in the House of Commons because this issue has gone on for too long and is having a detrimental effect on small businesses like us,” she said.

“For example, if we win a £1m project, £50,000 is held as retention money by the construction company to be paid upon completion of the project. However, most companies find excuses not to pay it when a contract has been completed – and we have a real fight on our hands to get it. That £50,000 could be the difference between making a small profit and making a loss on the project.

 

 

 

 

 

 

 

 

 

9 January 2018
Source: HVR

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