Member News: FETA update on retentions

The Federation of Environmental Trade Associations (FETA), of which The Building Controls Industry Association (BCIA) is part of, is working hard on behalf of its members to ensure the ongoing issues over retentions are being addressed with the Government.

As an Association, FETA recognises that fair and transparent payment practices are essential for the construction industry to thrive. The significant issues surrounding cash retentions across the supply chain, as highlighted by Carillion entering liquidation in January 2018, demonstrates the importance of late and non-payments being addressed within the sector.

It is estimated that £7.8 billion in retentions has been unpaid in the construction sector over the last three years, while more than £700 million was lost by small and medium sized businesses as a result of companies holding onto their cash and then going bust. This has been a long-standing issue for FETA as it supports its members, many of them SMEs who have been affected during past and current projects.

On 09 January 2018, the first reading of a new retentions bill was successfully introduced under the “Ten Minute Rule” in parliament by Mr Peter Aldous MP. Aldous proposed the ring-fencing of retention monies, as it protects against the insolvency risk but also actively disincentives deliberate abusers of the system. A second retention bill will take place at the House of Commons on 27 April 2018.

Prior to the inaugural reading of the retentions bill, in December 2017, the Government launched a consultation concerning payment practices in the construction sector. Consequently, Build UK and the Civil Engineering Contractors Association (CECA), with the support of Construction Products Association (CPA), have jointly responded and called on the Government to introduce legislation to ensure there is zero cash retention within the construction industry by no later than 2025.

Build UK, CECA and the CPA represent a vast range of members, including clients, contractors on the supply chain, to manufacturers and suppliers.

FETA willingly voiced their opinions on retentions and contributed fully to Build UK’s submission to the Government. FETA believes that the Government must legislate on these matters for any effective changes to happen, particularly in wake of Carillion and that the lengthy timescale of waiting until 2025 for retentions to be removed has no justifiable logic.

Russell Beattie, Chief Executive of FETA commented: “Retention payments are a deeply contentious matter for many of our members. FETA will continue to work alongside other trade associations to ensure the reform reaches a satisfactory conclusion for all parties. We welcome the second reading of the retentions bill and the response from the Government regarding the consultation. We remain convinced that legislation is the only way forward.”

The BCIA will continue to keep its members informed as and when the Government respond to the matters arising from the consultation and following the second reading of the retentions bill.