BESA

MP to bring forward Private Member’s Bill to ring-fence cash retentions

Peter Aldous MP

Peter Aldous MP

A backbench MP’s attempt to reform construction’s use of cash retentions has been backed by three industry associations.

Peter Aldous, Conservative MP for Waveney, has laid a Private Member’s Bill to protect the billions of pounds of cash retentions withheld from construction SMEs.

The Ten Minute Rule Bill will seek to amend the 1996 Construction Act and ensure that retentions within construction are held in a third party trust scheme. A key aim will be to help protect companies in the construction supply chain from insolvency and payment uncertainly. The first reading of the bill in the House of Commons will be on 9th January 2018.

While such bills almost never reach the statute book, they offer an opportunity for backbench MPs to highlight issues of concern and apply pressure to government.

Mr Aldous has received backing from the Building Engineering Services Association (BESA) and the Electrical Contractors’ Association (ECA) and the Specialist Engineering Contractors’ Group (SEC).

Cash retentions are ostensibly withheld as security in case a firm fails to return to rectify non-compliant work. But research commissioned by the Department for Business, Energy & Industrial Strategy (BEIS) has revealed that 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.

The research revealed that over a three-year period £7.8 billion worth of retentions was outstanding.

Peter Aldous said that he was concerned about the impact on SMEs: “I have been aware of retentions as an issue for a while, and with construction being a tough industry and uncertainty surrounding many aspects of the economy, small businesses need as much support as possible. There are a number of specialist engineering firms in Waveney, and what this Bill aims to do is to protect them and their livelihoods as well as 280,000 other construction SME’s nationwide.”

He added: “Over the past three years, £700m worth of retention payments to small businesses were lost due to the insolvency of a client, and if a small business suffers from an upstream insolvency of this kind, they are punished twice; firstly with the loss of work, and secondly with the loss of retention money. We therefore need action on this before more millions are lost.

“SMEs are the backbone of the UK economy, which is why they need support and protection. This Bill is not about abolishing payment retentions; it is about making sure that people’s money is safe so that businesses can grow and invest in their future.”

Professor Rudi Klein, the CEO of the Specialist Engineering Contractors’ Group, said the Bill had cross-party support.

He added: “I’m very grateful to Peter Aldous for initiating this. All that is required is mutuality of security. If cash retentions are required as a form of security, there must also be security for the cash as exists in many other countries around the world.”

ECA director Paul Reeve said: “This bill aims to protect the supply chain from the serious impact of lost retentions due to upstream insolvency. Way beyond those companies who are damaged by upstream insolvency, even the possibility of losing retention money in this way hampers small business investment and growth. As such, this bill is entirely consistent with the aims of the new industrial strategy, which looks for innovation and investment in skills”.

BESA legal and commercial director, Rob Driscoll, added: “To meet the challenges set by the recently launched industrial strategy and construction sector deal, enabling industry to re-invest in jobs, training, innovation and technological transformation, government intervention is necessary to secure working capital that underpins the delivery models for the industry as a whole.”

In April 2017 Scottish National Party MP Alan Brown laid a similar private member’s bill to protect cash retentions but it was overtaken by the general election.

Construction trade associations publish election manifesto wish lists

Houses-of-ParliamentTrade associations from the UK’s construction sector have put housebuilding, training and procurement reform at the forefront of their wish lists ahead of next month’s general election.

Publishing their respective election manifestos the lobby groups have detailed what commitments they would like to see from the major political parties.

In its Manifesto for the Built Environment supply chain, the Specialist Engineering Contractors’ Group (SEC Group) said a future government and parliament should commit to three-points for a world-leading UK specialist engineering supply chain in the built environment.

  1. Bring legislation to protect all retention monies in a ring-fenced account, as first step towards zero retentions by 2025, and prioritise review of the ‘Construction Act’. From 2021 all publicly-funded built environment work over £1 million should be paid using Project Bank Accounts. Payment security will guarantee a sustainable supply chain of SMEs.
  2. By 2022 all publicity-funded infrastructure and building works should adopt smarter procurement methods as a pre-condition to the availability of funding. Best models of practice in public procurement contracts will drive positive change across the industry.
  3. Establish a joint government/industry task group with a remit to develop proposals for a statutory licensing scheme for contracting companies. Building on current initiatives, incentivise the industry to aim for greater efficiency and best quality standards that will create a level-playing field for competition.

Professor Rudi Klein, SEC Group’s CEO, said that the challenge for the industry was to become leaner and fitter and government policy can be the catalyst for this change.

He added: “We urge all political parties to adopt these points in their business & industry policies as they are essential levers for economic growth and increased productivity.”

An engineering services manifesto has been launched by the Building Engineering Services Association (BESA) and the Electrical Contractors’ Association (ECA) which adds to a recent submission by the ECA and BESA on the government’s industrial strategy consultation.

The five-point manifesto calls for:

  1. Connecting the output of construction and operation of the UK’s built environment, and making it a strategic priority, to enable the sustainable delivery of economic, social and environmental benefits. Engineering services is uniquely positioned as a cornerstone of both sectors and has a central role in delivering these benefits throughout the lifetime of built assets, and, as a key enabler, should be selected by government for a ‘sector deal’.
  2. Ensuring that SME apprenticeship training is fully funded for the entire parliament. At present, there is significant concern that firms that are not required to pay the new apprenticeship levy may not be able to access the support they need to develop engineering and other technical skills.
  3. Ensuring government is a smart client and smaller businesses have stability of cash-flow and payment. A key request is for a digital payment platform in the public sector, linked to digital procurement processes. This would give greater transparency and speed to supply chain payment, and lower supplier risk.
  4. Making energy, heat and carbon efficiency a real sustainable delivery priority within the next parliament. Achievable energy efficiency goals, backed by government, need to be fulfilled if we are to meet our emissions reductions targets in the lowest cost way, as well as offering a way for businesses to improve their productivity.
  5. Improve productivity through action to enhance employee engagement. Government should introduce additional requirements in the procurement process to help mitigate against false self-employment and other tax avoidance schemes, and facilitate improved employer-worker collaboration, resulting in enhanced productivity.

ECA CEO Steve Bratt and BESA chief executive Paul McLaughlin said: “The next government has a great opportunity to deliver an investment and regulatory climate in which industry thrives and where buildings and infrastructure support UK growth and productivity.

“Our five-point manifesto would support business, by delivering highly skilled apprenticeships, giving SMEs the opportunity to grow, and ultimately, improving UK productivity.”

The National Home Improvement Council (NHIC) have launched its industry-led manifesto outlining five key areas it feels the next UK government should focus on alongside negotiating Britain’s departure from the European Union.

NHIC-5 Point Plan-rev0405The NHIC wants all political parties to clearly establish in their manifestos how they would work with industry to overcome some of the fundamental challenges currently faced by the country, including not only the need to build more quality energy efficient homes, but also how to improve the quality of our existing housing stock.

Anna Scothern, executive director of the NHIC, said: “Great Britain is one of the richest countries in the world, yet 4.5 million families still live in fuel poverty. The National Home Improvement Council believes that no individual or family should have to make ‘heat or eat’ choices each winter.”

She added: “27% of the UK’s CO2 emissions come from our existing 26 million homes and while demand for housing continues to rise with new house building failing year-on-year to meet the established government target of 1 million new homes by 2020, refurbishment, repair and maintenance must be an essential part of the new Government’s overall housing strategy.”

The Federation of Master Builders (FMB) also launched a five-point plan:

  1. Ensure that the construction industry has enough skilled workers
  • Introduce a flexible system of immigration that allows key strategic industries like construction to draw upon adequate levels of skilled labour from the EU and beyond.
  • Commit to increasing the quality, duration and thoroughness of apprenticeships and thus improve the image of vocational training so that we can attract more young people into our industry.
  1. Increase the supply of new homes
  • The UK government should commit to building at least 200,000 new homes per year in England and encourage the delivery of 25,000 new homes in Scotland; 14,000 in Wales; and 11,000 in Northern Ireland.
  • In England, continue to work with the house building industry to successfully implement key recommendations within the 2017 Housing White Paper that are designed to increase house building through SME builders.
  1. Improve the quality of new and existing homes
  • Introduce a mandatory warranty requirement for all domestic building works that require Building Regulations approval and structural engineering calculations.
  • Commission a review of new homes warranties to establish whether the warranties currently provided are adequate.
  1. Make homes more energy efficient
  • Reduce VAT on housing renovation and repair work from 20% to 5% to encourage refurbishment work, including energy efficiency measures.
  • Ensure that any government investment in reducing energy bills is targeted primarily at improving the energy efficiency of the UK’s homes.
  1. Boost growth among construction SMEs
  • Ensure that the overall regulatory burden on small businesses is reduced as part of the Brexit process.
  • Improve public procurement for construction SMEs and ensure local firms win a higher proportion of local authority contracts post-Brexit.

Trade body BESA questions future of CITB Levy following cuts plan

besa-Building Engineering Services AssociationContractors’ group BESA has challenged the need for a levy from the Construction Industry Training Board (CITB) and demanded to know what employers receive for their investment.

CITB unveiled proposals last week to reduce the training levy it charges firms next year in a bid to stave off its closure.

It has offered to cut its bill from 0.5 per cent to 0.35 per cent of an employer’s payroll ahead of an industry vote on its future later this year.

While the reduction in charges will be welcomed by those firms in scope to CITB, the creation of the separate Apprenticeship Levy means some firms are now being asked to pay twice.

“The big question for employers [including those BESA members who have to pay the levy] is whether there should be a CITB levy at all,” said BESA training director Tony Howard. “The CITB has not been able to spend all the money it raises through the levy for years and cannot get funding to more than 9 per cent of SME’s.

“Every so often it needs to reduce the embarrassing amount of money it has sitting in the bank, so it builds websites and does roadshows trying to engage SME’s in obtaining grants from a system they don’t understand.”

Mr Howard said the one third cut was a “gimme” as the organisation could afford to reduce its income by that amount without any impact on its current level of activities.

“Many employers would say it is not necessarily the amount of levy that is being raised from them that is the problem, but the effectiveness of the support derived from it,” he said. “I think the time is right for the CITB to explain how it will give employers a real tangible return on their investment through the Levy that is innovative, clear, concise and easy to access.”

He added that the principle of a training levy remained sound as it levelled the playing field for all employers and ensured that vital training did take place – pointing out that many training levies in different parts of the world were very successful. However, the pressing need for targeted funding for apprenticeships in key industry sectors gave the Apprenticeship Levy a clear mandate.

“The future relevance of the CITB is less clear,” said Mr Howard. “Later this year, all employers will get the chance to exercise their democratic right and vote on the future of the CITB Levy,” he said. “As we now have an Apprenticeship Levy, the obvious question is whether there should be two funding streams.”

To renew its Levy Order from the government, the CITB must demonstrate there is industry consensus for it to continue. Employers will, therefore, be asked to vote on the issue between August and September, with a Government decision expected by February 2018 and the new (Apprenticeship) Levy coming into effect in April.

The CITB’s chief executive Sarah Beale said she was “confident that this Levy offer is the best option”.

She added that the organisation was embarking on a process of “engaging with our industry” to ensure “that our offer is relevant, makes a real difference and delivers value for money”.

“It is for the construction industry to decide what type of support they want for skills and training from CITB in the future,” added Ms Beale.

The CITB has also set up an employer-led Levy Working Party to look at how the CITB Levy could work alongside the Apprenticeship Levy from 2018. However, companies with a payroll over £3m and who are in scope of the CITB will have to pay both levies for a year.

Under the body’s temporary ‘Transition Package’ these firms will be able to claim CITB funding “at an enhanced rate, capped at their level of Apprenticeship Levy contribution”, according to the training body’s website.

BESA ready to plug certification gap

Paul McLaughlin

Paul McLaughlin

Building engineering services employers have been reassured that new routes to professional certification will be made available by the passing of revised F Gas handling legislation next year.

There was widespread alarm at the announcement that the CITB is to close its Utilities Engineering Division, which provided training and certification for the gas, electric, water, oil, refrigerant, steam and renewable industries in January.

In particular, companies working with refrigerant gases, whose staff are legally required to carry F Gas certification, were concerned about the apparent gap in provision.

However, DEFRA – the government department responsible – said the legislation would pave the way for the creation of new schemes and it has already approved the Building Engineering Services Association (BESA), which operates the Refcom safe refrigerant handling scheme, as an F Gas certification body.

“We are delighted to have received approval from DEFRA to help plug this vital gap in certification,” said BESA chief executive Paul McLaughlin. “It is important that there continues to be a number of providers in the market, offering choice and ensuring value for money, and we have been working with DEFRA for some time to set up our own scheme to support employers’ right across the sector.”

Paul McLaughlin stressed that there was no need for employers to seek immediate re-certification via alternative providers as their existing CITB certificates will remain valid until their printed expiry dates and the new BESA scheme will be in place from next year.
The Association said F Gas would be the first of a series of new BESA certification programmes and would be followed by ventilation; health & safety; unvented hot water; energy efficiency and renewables; and ventilation hygiene.

“The new regulations offer a catalyst for BESA to disrupt the traditional certification market,” said BESA training director Tony Howard. “Historically, we have delivered training and certification ourselves using third parties with assessments we developed. We now intend to grow and develop training, assessment and certification to enable employers in our industry to access the provision they need at a local level through licensed providers audited against our standards.”

The development of new style apprenticeship training is also taking place alongside the changes to certification and the Association said the government’s new ‘Trailblazer’ apprenticeship scheme was an opportunity “to radicalise provision of training in the sector”.

“There needs to be greater clarity between ‘short courses’ and apprenticeships,” explained Mr Howard. “BESA plans to change the nature of apprenticeships by raising the bar of provision and enabling industry specialists to help employers train their own apprentices.”

Employers have welcomed the broadening of BESA’s remit and association president Malcolm Thomson, who runs an air conditioning business, said he was “encouraged by the actions that BESA is taking to ensure the continued smooth provision of F Gas Personnel Certification”.

“Businesses must have a choice of routes to certification to satisfy their own business models. F Gas is our first scheme to hit the market, but it will certainly not be the last,” he added.

International webinar offers the ‘smart’ answer to indoor air quality

besa-Building Engineering Services AssociationIncreasingly strict building ventilation standards are making the task of achieving a good balance between healthy indoor air quality (IAQ) and lower HVAC power and energy consumption more challenging for building engineers all over the world.

The Building Engineering Services Association (BESA) is hosting an international webinar organised by the CIBSE ASHRAE Group and featuring global IAQ authority Max Sherman – senior scientist at the Lawrence Berkeley National Laboratory in California.

This will take place on Wednesday, 9 November 2016 starting at 6pm (UK time).

As well as being responsible for over 170 technical papers in his 36 years at this prestigious institution, Max is an ASHRAE Distinguished Lecturer and former board member. He is also Principal of EPB Consulting Group, which carries out forensic, engineering and expert services relating to building science including energy efficiency and indoor air quality. Max is also a board member of the Air Infiltration and Ventilation Centre, which is an annex of the International Energy Agency based in Brussels.

He believes that a more harmonious relationship between IAQ and energy consumption can be achieved by being smarter about how and when ventilation occurs, which stems from an understanding of why we ventilate.

High performance

For example, numerous smart ventilation strategies are possible in high performance homes, such as increasing ventilation when the outdoor temperature is less extreme; scheduling ventilation during off-peak hours; avoiding ventilation during periods of poor outdoor air quality, and reducing whole house ventilation operation in response to incidental ventilation (e.g., bathroom or kitchen fan operation) and occupancy.

Speaking via web link live from California, Max will review the how and why of ventilation; outline the requirements of a smart control ventilation strategy; provide some actual examples of smart ventilation strategies; and look further into the future of IAQ.

The session will be chaired by BESA technical director Tim Rook and there will be a discussion led by the Association’s technical committee following the presentation. There are a small number of ‘physical’ places for those wanting to join the discussion in person, but many more will be able to join in online via the webinar link.

For more information about taking part, please email: ewen.rose@theBESA.com.

BESA urges Scottish Government to go further with Project Bank Accounts plan

Paul McLaughlin

Paul McLaughlin

The Scottish Government’s announcement that Project Bank Accounts (PBAs) are to be used as the preferred method on all public sector construction projects over £4 million has been hailed as a major step towards greater financial stability for the industry.

Derek Mackay, Scotland’s cabinet secretary for finance, announced that the method of protecting payment to sub-contractors in construction supply chains will be imposed on all projects procured by Scottish Government departments from October 31 this year.

The Building Engineering Services Association (BESA), which represents specialist engineering contractors and was heavily involved in the campaign to have PBAs introduced, congratulated Mr Mackay for taking the “vital leap forward” which it says will improve payment conditions and speed up cash flow.

BESA chief executive Paul McLaughlin urged the rest of the UK to follow suit by implementing a policy that could improve financial conditions for the whole construction sector.

“Unfair and abusive payment practices have been a blight on the construction process for decades,” he said. “The Scottish Government should be roundly praised for taking a bold step to remove one of the barriers to efficient project delivery.”

PBAs are a cash disbursement model that allows money to be ring-fenced in bank accounts from which payments are made directly to suppliers. This reduces the risk of contractor insolvency and the consequent disruption to projects. It also cuts out much of the additional cost of risk pricing and debt management associated with having multiple layers of payment within the contractual chain.

PBA payments can be made within as little as 12 days and, once in the account, the monies are protected from upstream insolvencies and unfair delays. Public Highways England and the Environment Agency have been using this method for some time and, on average; ‘Tier 3’ sub-contractors on their projects are paid within 19 days.

“Security of payment allows firms to invest in the skills and processes they need to improve productivity and fund growth,” added Mr McLaughlin. “By improving cash flow through the supply chain, project clients can also be assured of a more cohesive, harmonious and, therefore, efficient project process.”

He also called for the introduction of digital payment platforms as the next step in the process of “remedying endemic industry payment problems”. This would give SMEs the reassurance of transparent and legislatively compliant payment processes supported by electronic banking; allowing them “to plan for the future with greater confidence and commercial stability”.