Scottish MP wins praise from construction small firms

Alan Brown MP
Alan Brown MP

Kilmarnock and Loudoun MP Alan Brown has won praise from small construction firms in Scotland and south of the Border for his stance on the issue of cash retentions in the industry.

An age-old practice specific to the construction industry, cash retentions involves holding back monies from due payments ostensibly as security in case a firm does not return to rectify defects.

However, according to the Specialist Engineering Contractors’ Group Scotland, which represents many small engineering firms in construction, in reality the system is regularly abused. The organisation said the money is used to bolster the cashflow of the party deducting it and in many cases the money is released years after completion of the work or not at all.

In 2015 small firms across the UK lost almost £50 million worth of retentions because of the insolvency of companies up the supply chain.

Alan Brown has been pressing the Westminster government to release the results of a review it has been carrying out into the retention system. Last year he sought to amend the Enterprise Bill to require that retention monies are protected by being held in a ring-fenced account until they are released. This reflects legislation already introduced in the US, Australia, New Zealand and certain EU member states.

Alan Wilson, national executive officer of the SEC Group Scotland, said that Alan Brown had become a champion for small firms on this issue.

He added: “Thousands of SMEs in Scottish construction and beyond are grateful for the support provided by Alan. The abuse and misuse of retention monies is scandalous. With Alan’s support and that of other like-minded MPs we hope that 2017 will see effective action on this issue.”

Share icon
Share this article: