Supporters of the Aldous Bill, which proposes to put retentions in a secure deposit scheme, now claim to have the support more than half a million businesses and self-employed professionals.
The private members’ bill, introduced by Conservative MP Peter Aldous, seeks to end payments to subcontractors being withheld for an unreasonably length of time and end the risk of losing retentions via contractor bankruptcy.
Aldous’ bill was introduced six days before the collapse of Carillion.
It now has the support of accounting body the Association of Accounting Technicians (AAT), which its supporters say is the 80th body to lend its backing to the bill as part of a coalition of over 550,000 companies and self-employed professionals.
The coalition includes founding members the Electrical Contractors Association (ECA), Building Engineering Services Association (BESA), and Specialist Engineering Contractors (SEC) Group, as well as the Federation of Small Businesses, Institute of Directors, and British Chamber of Commerce.
It also has support from over 150 MPs.
However, other industry organisations such as Build UK and the Civil Engineering Contractors Association (CECA) have written to small business minister Andrew Griffiths rejecting the proposed deposit retention scheme because of a lack of consensus among members.
Peter Aldous MP said: "To have a body from the finance and accounting world on board is great. It confirms the economic value retention deposit schemes would have, the day-to-day benefit it would lead to for thousands of small businesses and the clear industry appetite for reform.
"AAT represent a diverse range of financial experts, from blue-chip corporate giants and public sector institutions to micro-businesses and everything in between. I am very pleased to welcome them as the 80th organisation to back my Bill.”
Mark Farrar, AAT chief executive said: "AAT is very pleased to support this much needed and long overdue campaign. Retentions seriously impact on the productivity of SMEs and in some cases their viability. They also serve to increase the overall cost of construction.
"Billions of pounds of SME cash is tied up in retentions that are held for unreasonable amounts of time. That is money which could be better put to use helping SMEs survive, grow and succeed. AAT therefore supports moves to ensure retentions are placed in a Government backed scheme, similar to the way shorthold tenancy deposits are currently saved."
ECA deputy director of business policy & practice, Rob Driscoll, added: "We are delighted to have one of the UK’s leading accountancy bodies now supporting urgent reform of retentions in construction.
"The coalition backing reform of payment and retentions has reached unprecedented levels and is without question the real voice of the industry. We urge government to seize the day and take steps to guarantee reform in the construction industry – a key engine of growth – within this parliament and the long awaited Sector Deal."
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I dont understand practically how this would work. Claims by main contractors against their subcontractors, sometimes genuine, sometimes spurious in the construction industry, abound.
These are normally settled between the parties by negotiation. In this case the trustees of the retention fund would be put in the position of arbiters between the parties.
Is that the intent?