SEC Group’s campaign to see cash retentions protected reaches a new milestone on Wednesday this week when Kilmarnock MP, Alan Brown, introduces a Ten Minute Rule Bill to protect cash retentions.
At any one time over £3 billion of cash retentions is outstanding in the UK’s construction industry. This huge sum is primarily funded by small firms in the supply chain. Retention monies are held back from due payments on a temporary basis pending satisfactory completion of the works. The reality is that they have become an enforced loan which is only paid back years after completion of the work.
A Trade and Industry Select Committee described the practice of retentions as ‘outdated’ and ‘unfair’ almost 15 years ago. In many cases cash retentions are not paid back because of insolvencies up the supply chain. In 2015 between £40 million and £50 million worth of cash retentions was lost by SMEs following insolvencies and .
The Bill will require retention monies to be kept in a protected or ring-fenced account until such time as they are due for release. In this way construction SMEs can be assured that the monies will be available for release (following satisfactory completion of their work) and that the waiting for their release will be substantially reduced.
SEC Group say that this measure will immediately improve liquidity for SMEs and it will also enable them to borrow on the security of their protected retention monies.