Bill passes first parliamentary hurdle
- Credit: Archant
Proposals to outlaw abuse of the retentions system within the construction industry have been unveiled in parliament.
Waveney MP Peter Aldous has presented a ten minute rule bill to protect retention deposits in connection with construction contracts.
The 'Aldous Bill' was introduced to the House of Commons last week concerning the ring fencing of cash retentions for Small and Medium Enterprises (SMEs).
At the Westminster briefing on January 9, the bill – which has attracted cross-party support and strong support from the construction industry – passed its first reading stage and a second hearing is scheduled for Friday, April 27.
According to research commissioned by the Department for Business, Energy and Industrial Strategy (BEIS), it was revealed that over a three-year period £7.8bn worth of retentions was outstanding for small businesses.
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Cash retentions are withheld as security in case a firm fails to return to rectify non-compliant work. However the monies are primarily withheld to bolster the working capital of the party withholding them.
Furthermore the practice gives rise to widespread abuse with the monies being withheld for three and more years.
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With Mr Aldous prompted to act by introducing a bill which would secure and release on time these retentions by way of a deposit scheme, he said: 'SMEs are the backbone of the UK economy, which is why they need support and protection.
'There is a clear need to build more houses, and with construction being a tough industry and uncertainty surrounding many aspects of the economy, small businesses need as much support as possible.
'We therefore need action taken to protect these monies before more millions are lost, and this bill is about making sure that people's money is safe so that businesses can grow and invest in their future,' he added.
'I was pleased to be able to explain to the House why the issue of lost revenue due to upstream insolvencies has caused such damage to SMEs not only in my constituency but also nationwide, and to offer a workable solution to the problem.'