Chartered Institute of Building Magazine of the Chartered Institute of Building

Construction firms' £1bn retentions black hole

An analysis of the UK’s top 12 construction companies by the Specialist Engineering Contractors’ Group has revealed that they are owed a combined £1bn in retentions by their customers.

However, smaller suppliers are footing the bill, with an estimated £800m withheld from supply chains to cover the cash flow shortfall.

One company withheld money from its supply chain that was 1.5 times greater than the value that had been withheld by its own customers, the group found.

About £3bn in cash retentions is outstanding in the UK. 

Professor Rudi Klein, SEC chief executive, said: “There is no other industry sector in the UK where such a large amount of cash is at risk, especially for SMEs. By the time these monies are released back to SMEs in the supply chain some years would have elapsed. In a high proportion of cases the retention represents the profit element for SMEs.”

SEC estimates that £400m would have been held by public sector bodies. In this case the retentions provided by the top contractors would not be at risk (since public bodies do not go into insolvency), but there is still a significant risk for the SMEs lower down the supply chain. 

With the publication of a government review of the retentions system imminent, SEC is urging the government to introduce legislation to protect or ring-fence cash retentions to remove the insolvency risk and to ensure that retentions are released on time. Such legislation already exists in parts of Europe, Australasia and North America.


As a small company that is at times owed several thousands of pounds in retentions - some going back three years or more - the government review is most welcome, but something with 'teeth' is also needed to ensure payments are made on time. I think the feeling among some larger building companies is to ignore the smaller companies and they'll eventually give up and go away - leaving them to reap the benefit.

  • 15th Feb 2017, at 09:49 AM
  • Sandie Hornby

Leave a comment


27 February 2017 Housing association offers offsite expertise to rest of industry

27 February 2017 Shard developer Irvine Sellar dies

27 February 2017 CIOB mourns passing of 'special' past president Professor Li Shirong

27 February 2017 Balfour exits ME as part of 'simplification' programme

27 February 2017 Southwark pleads guilty over Lakanal House fire

27 February 2017 Lendlease to build Google King's Cross HQ

26 February 2017 London firm fined £450k for work at height incident

26 February 2017 Tradesmen sentenced for £300k tax fraud

26 February 2017 Boardman peddles benefits of collaboration at Trimble event

23 February 2017 Report slams government free schools spending

23 February 2017 T&T appoints Tom Deacon as head of digital

23 February 2017 Talent scale lays bare extent of skills crisis

23 February 2017 Morgan Sindall reports 2016 profit of £44m

23 February 2017 Barratt profits jump on regional strength

23 February 2017 Consultation on future of CITB launched

22 February 2017 Project spotlight: How Reading's Thames Tower was made fit for 21st century

21 February 2017 Galliford Try sets 2% margin in new strategy

21 February 2017 Skanska to trial augmented reality hard hats

21 February 2017 Engineering report reveals 20,000 pa skills shortfall

21 February 2017 EIC calls for new recycling targets post-Brexit