The Ten Minute Rule Bill, to be introduced by Peter Aldous MP, will seek to amend the 1996 Construction Act and ensure that retentions within construction are held in a third party trust scheme. A key aim will be to help protect companies in the construction supply chain from insolvency and payment uncertainty.
The first reading of the Bill in Parliament will take place on January 9 2018.
Both BESA and ECA jointly endorse the Bill, and will fully support it through its progress in Parliament. In addition, both bodies anticipate significant additional political and industry support for the Bill.
Recent research by Pye Tait on retentions has shown that over £700 million worth of retention money has been lost due to upstream insolvency in the past three years and that, on average, £27,500 is held in retention per contractor.
In an industry of 280,000 SMEs, 44 percent of contractors have suffered non-payment through upstream insolvency in the last three years.
Paul Reeve, director of business and external affairs at the ECA stated: “This Bill aims to protect the supply chain from the serious impact of lost retentions due to upstream insolvency.
“Way beyond those companies who are damaged by upstream insolvency, even the possibility of losing retention money in this way hampers small business investment and growth. As such, this Bill is entirely consistent with the aims of the new Industrial Strategy, which looks for innovation and investment in skills”.
Rob Driscoll, legal and commercial director at BESA added: “With central government and major projects the biggest single construction client, the case for reform is inherently connected to the Government’s industrial strategy.
“To meet the challenges set by the recently launched Industrial Strategy and construction sector deal, enabling industry to re-invest in jobs, training, innovation and technological transformation, government intervention is necessary to secure working capital that underpins the delivery models for the industry as a whole.”
The Bill will be introduced while the Government consults over reforming the current retentions model. The government consultation runs until January 19 2018.