Almost £700m of construction cash retentions lost over three years
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Almost £700 million worth of cash retention has been lost in construction over a three-year period by reason of insolvencies, according to new Department of Business, Energy & Industrial Strategy (BEIS) research.
The figure, which consultants Pye Tait said reflects 2016 prices, has been described as “shocking” by the Specialist Engineering Contractors’ Group (SEC Group) and far in excess of its own estimates.
SEC Group’s CEO Rudi Klein said that this vast sum, without more, justified legislation to ring-fence retention monies.
He said: “The bulk of these monies will have been lost by SMEs. They legally belong to the firms from whom the monies were withheld; consent to the withholding of the monies did not extend to their being used to pay off the insolvent party’s creditors. This represents a scandalous and continuing drain on the scarce resources of SMEs in the construction industry.”
SEC Group – which represents the largest sector in the construction industry (by value) – has been campaigning for all cash retentions to be deposited with independently run retention deposit schemes.
Rudi Klein added: “Given the dire finances of some of the UK’s largest construction companies it is even more urgent that Parliamentary time is secured for legislation to protect retention monies.”
BEIS is currently consulting on whether cash retentions should be lodged in a statutory retention deposit scheme.
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