Retention Bill’s second reading imminent

The Construction (Retention Deposit Schemes) Bill has just been published in time for its 2nd Reading on Friday (27 April 2018). The Bill stipulates that, unless the monies are protected, any clause in a construction contract enabling the deduction of cash retentions will be invalid. Cash retentions will have to be safeguarded within a retention deposit scheme. The Bill will apply to the whole of the UK.

The Construction (Retention Deposit Schemes) Bill has just been published in time for its 2nd Reading on Friday (27 April 2018).

The Bill stipulates that, unless the monies are protected, any clause in a construction contract enabling the deduction of cash retentions will be invalid. Cash retentions will have to be safeguarded within a retention deposit scheme.  The Bill will apply to the whole of the UK.

The rules for establishing and operating retention deposit schemes will be contained in secondary legislation.  Such schemes may simply provide a ‘custodial’ service to ring-fence the monies or, instead, could provide insurance-backed alternatives. Schemes would be expected to provide quick and inexpensive adjudication or mediation procedures to resolve any disputes holding up release of the monies.

The Bill is a Private Member’s Bill, having been introduced by Conservative MP, Peter Aldous, at its 1st Reading on 9 January 2018.  It is the latest in a series of attempts made over many years by the Specialist Engineering Contractors’ (SEC) Group to overcome what they dub ‘the abuse associated with the practice of retentions in the construction industry’.

Speaking on behalf of SEC Group, its CEO, Professor Rudi Klein, said that as much as £750,000 worth of retention monies could be contained within the £7bn (‘and rising’) of Carillion’s liabilities.

He added: “We know that Ministers are sympathetic towards the Bill but, at this stage, the Government must issue a robust public statement of support for the Bill”.

SEC Group represents the following trade associations:  the British Constructional Steelwork Association, the Building Engineering Services Association, ECA – the Electrotechnical and engineering services trade body, Lift and Escalator Industry Association, SELECT (Electrical Contractors Association of Scotland), SNIPEF (Scottish and Northern Ireland Plumbing Employers’ Federation) and Scaffolding Association.  SEC Group represents the largest sector in the UK construction industry (by value).

The SEC Group says that the Bill is supported by 80 organisations connected with the construction industry, while ‘thousands of firms’ in the industry have contacted their MPs to drum up support for the Bill. If it passes its 2nd Reading it will go to Committee Stage for a detailed consideration of its provisions. A year ago a similar Bill was introduced by SNP MP, Alan Brown, but was lost because of the General Election.

 

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