More than 100 MPs are backing a bill in favour of holding cash retentions in trust to help support SMEs within the construction industry.

The Construction (Retention Deposit Schemes) Bill 2018 was introduced by Peter Aldous MP and aims to amend the Construction Act to introduce regulations which would ring-fence retention monies in deposit protection schemes for the supply chain.

The issue was brought into sharp focus in January with the collapse of industry services giant Carillion. Following the company's failure, the number of MPs supporting the bill increased ten-fold, just six days after the first reading of the 'Aldous Bill'.

The second reading of the bill is due to take place on Friday, 27 April. Prominent supporters include Labour frontbench, Shadow Chancellor John McDonnell, Shadow BEIS Minister Rebecca Long-Bailey, Conservative ‘Father of the House' Kenneth Clarke, former Digital Economy Minister Ed Vaizey, Liberal Democrat Leader Sir Vince Cable and Green Party Leader Caroline Lucas.

The Building Engineering Services Association (BESA), the Specialist Engineering Contractors Group (SEC) and the Electrical Contractors Association (ECA) have been gathering support for the Bill. In the wake of Carillion's collapse, a coalition of over 75 bodies (representing over 340,000 businesses) have united together to help push through the legislation, with a delegation from the coalition joining Peter Aldous next week to present a petition to 10 Downing Street.

-- Advertisement --

Peter Aldous MP said: "Industry support for reform to outdated payment systems is at unprecedented levels, for which I am very grateful. Construction is an essential underpinning of our lives and work, and we need to support the industry and especially SMEs to ensure future growth and prosperity. The petition being presented represents over 330,000 businesses and there are over 100 of my Parliamentary colleagues that support reform to the practice of cash retentions.

"We have a golden opportunity to improve the industry for the better, level the playing field for SMEs and protect thousands and thousands of jobs. The industry loses around £1m for each working day, mostly from SMEs. There have been proposals to stop the abuse of retentions before, but this time there is the largest coalition on fair payments ever."

ECA Director of Business, Paul Reeve, said: "Carillion's collapse highlighted serious supply chain and procurement problems in construction, which need an urgent remedy. Reforming the payment and cash retention systems is an essential requirement for protecting smaller businesses, ensuring the successful future of the UK construction industry, and for sustainable economic growth."

David Frise, Chief Executive Officer of BESA, said: "The urgent need for reform is clear from the cross-party support the Aldous Bill has. The impact from lost Carillion retention money on apprentices, jobs and investment in the sector is already evident. Holding cash retentions in trust will make sure that the money is safe and does what it is intended to do."

(LM/MH)