Commons focus on small businesses

OLDHAM East and Saddleworth MP Debbie Abrahams is on a mission to tackle “hated” cash retentions that can ruin small businesses.

Mrs Abrahams has moved an amendment to the Small Business Enterprise and Employment Bill to give firms a helping hand.

A cash retention is when client companies withhold part of their payment to a subcontractor in the name of security if something goes wrong that isn’t repaired.

The Labour MP said: “At any one time over £3billion is outstanding in the construction industry by way of cash retentions.

“I have several examples, including that of a company that wrote to me to say that £60,000 of retention money was withheld — 5 per cent of the overall contract — for eight months.

“There was nothing in the contract about that. They had to go through adjudication and it ended up with them losing £22,000. These are small businesses, and this is their livelihood.

“There is evidence that cash retentions have been used to shore up the working capital of local authorities and suppliers.”

“My new clause requires the publication of company policy, practices and performance on retention money, a review of this and recommendations about further action.”