Construction Suppliers Demand End to Late Payments

8th January 2018. 



Construction suppliers are supporting new legislation that will tackle the late payment culture that they say is undermining investment in the industry and harming small companies.

Business groups representing interests from all areas of the industry are supporting MPs, led by Conservative Peter Aldous, who are trying to bring in legislation that would protect cash owed to suppliers when a builder goes bust.

The move is intended to address the issue of so-called retentions, under which a portion of a construction supplier’s bill is held back in case the sub-contractor refuses to return for defects.

Industry groups say that retentions have been abused by construction giants to smooth their own cashflow issues, with suppliers sometimes never getting their money back.

About £3 billion in cash retentions is outstanding in Britain, according to the Specialist Engineering Contractors’ Group, which represents tens of thousands of small businesses.

The proposed legislation, would force builders to hold retention money in a separate account so that it could not be used for their own cashflow purposes.

Rudi Klein, chief executive of the Specialist Engineering Contractors Group, fears that this “scandalous” drain on funds are putting pressure on the already scarce resources of small companies, and could lead to short cuts being taken, undermining safety.

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