Industry Bodies Demand End For Retentions

25th January 2018.

Main contractors and clients are backing the campaign to end retentions in construction. These payments, which are withheld by firms to motivate contractors to return to work, are rarely returned and occasionally used for the firm’s own personal gains. They have been a sore spot for many contractors and have left reaping holes in the cash flows of many small firms. While there have been various calls for reform before now, the recent Carillion crisis has highlighted the vulnerability of small firms and how swift action is needed.  The Credit Protection Association has helped many members with a retention crisis, and we agree that they either require tougher regulation or abolition.

Build UK, the Civil Engineering Contractors Association and the Construction Products Association have both support this call for reform, as retentions keep burning a hole in the industry’s pocket.

Build UK Chief Executive Suzannah Nichol MBE said:“The collapse of Carillion has reinforced the need for significant change in the construction industry, and we urge Government to take legislative action to abolish cash retention.

According to Build UK, CECA and CPA, an end to retentions would mean an increase in capital within the supply chain, an enhanced incentive to high quality of work without the threat of unpaid payment, and an increased collaboration and transparency in the construction industry.

Since the collapse of Carillion, construction firms have been left in a vulnerable state. Some are owed millions by the construction company and some have lost valuable contracts after the company’s liquidation. This recent smack-down on retentions is a way to protect the sector and its workers, and return control of payment over to the workers and their ability- and their commitment- to do a good job. The Credit Protection Association agree that retentions are damaging to the industry, and we have fixed many damaged cash flows as a result of these withheld payments. Until any new legislation is brought before the courts, we strongly recommend all business owners who experiencing bad cash flow come to us for aid. We can revive your cash flow through our debt recovery service and get your business thriving again. In the wake of high profile liquidations, from Palmer & Harvey to Carillion, it has become increasingly clear how essential it is to prepare for the worst case scenario. Please contact CPA for help and advice!