Members urged to give their views on retentions


S


ELECT is reminding Members to have their say and take part in an industry-wide consultation on the use of cash retentions in construction. SELECT’s Specifier and


Client Relations Manager Yvonne Wilson said that every Member business should make their views known to the Scottish Government discussion before it closes on 25 March. She said: “This consultation gives


everyone in our industry a great opportunity to make their voice heard when it comes to the ongoing issue of retentions. “We know from Member feedback that late and withheld payments caused by retentions continue to cause problems for businesses up and down Scotland. “The disruption to all-important cash-flow doesn’t just cause financial worries – it can lead to serious mental


health issues and


depression. That’s why it‘s vital that SELECT Members have their say and make their


concerns known. Only by speaking out together can we


b anwe


hope to put an end to this outdated practice.”


The consultation was announced in December following an ongoing campaign by SELECT, working in partnership with the Specialist Engineering Contractors’ (SEC) Group. SELECT and SEC Group Scotland


have been carrying out extensive lobbying amongst members of the Scottish Parliament to encourage them to support legislation to ring- fence the monies. Yvonne, who also works closely with SEC Group Scotland, added: “Our message is clear: Cash retentions must be put in a ring-fenced account or scheme. In this way we are more likely


to see the end of a 200-year-old measure that’s been abused to the detriment of small firms which often wait years to get retentions released.” The new consultation comes after a review of the system of cash retentions which was carried out for the


for the Scottish Government by c


consultants Pye Tait. P


In the subsequent report, Pye Tait said: “Qualitative evidence overwhelmingly shows that the biggest problem with the


practice of retentions is the insi


“Clie


for contractors at Tier 2 Clients with experience of


fo and below. and


holding retentions in the last three years, say that, on average, retentions are used on 81% of all their current contracts. And the larger the organisation, the more likely they are to impose retentions on their sub-contracting firms. “A requirement for retentions to be held in a protected and separate location would meet almost all of the serious criticisms of the current retention systems.” Cash retentions are deducted from


due payments, ostensibly as security in case a firm fails to return to remedy non-compliant work.


In practice, the monies – which belong to the firms from whom they have been withheld – are used to bolster the cash reserves of large companies and even public sector bodies such as local authorities. Various estimates put the loss of cash retentions from the Carillion collapse in 2018 as between £¼ billion and £½ billion. SEC Group Scotland has reminded the Scottish Government that in a 2013 review of public sector construction, a recommendation was made that cash retentions should be kept in trust.


Retentions can disrupt cash-flow i


To take part in the consultation, go to: www. gov.scot/publications/ practice-cash-retention-


under-construction-contracts CABLEtalk FEBRUARY/MARCH 2020 11 tability it creates


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