Scottish Government opens consultation on use of cash retentions

An industry-wide consultation on the use of cash retentions in construction has been launched by the Scottish Government.

Scottish Government opens consultation on use of cash retentions

The consultation follows a review of the system of cash retentions carried out by consultants Pye Tait.

A campaign by the Specialist Engineering Contractors’ Group in Scotland has argued that cash retentions, which are ostensibly deducted from due payments as security in case a firm fails to return to remedy non-compliant work, are in practice being used to bolster the cashflow of large companies and even many public sector bodies such as local authorities.  

Various estimates put the loss of cash retentions the Carillion collapse as between £250m-£500m.

SEC Group Scotland has been carrying out extensive lobbying amongst members of the Scottish Parliament to encourage them to support legislation to ring-fence the monies.

Speaking on behalf of SEC Group Scotland, its national executive officer Alan Wilson said that all firms in Scotland’s construction industry will be encouraged to participate in the consultation.

He added: “Our message is clear. Cash retentions must be put in a ring-fenced account or scheme. In this way, we are more likely to see the end of a 200-year-old practice which has been abused to the detriment of small firms which often wait years to get their retentions released.”

The closing date for the consultation will be 25 March 2020.

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