MP tackles ‘hated’ payment tactic

Date published: 18 November 2015

LABOUR MP Debbie Abrahams has hosted a cross-party meeting in Parliament on the issue of retentions — the withholding of payment until the completion of a job — a practice rife in the construction industry which often results in smaller companies losing money.

Mrs Abrahams, MP for Oldham East and Saddleworth, is the creator of the award-winning Be Fair — Pay on Time campaign, set up to highlight the effects of late payments on small and medium enterprises.

Mrs Abrahams said: “I hosted the meeting for MPs so the Specialist Engineering Contractors’ (SEC) Group could brief them on the progress of the two amendments they have tabled for the Enterprise Bill in the House of Lords.

“The amendments are designed to tackle this much hated and damaging system of retentions.”

Mrs Abrahams was the first MP to raise the issue of retentions in a Parliamentary debate and tabled amendments to address the problem in the last Parliament.

She chaired the meeting and was joined by several MPs including Bill Esterson MP, a member of the shadow front bench team dealing with the Enterprise Bill, and Mark Pawsey MP, Parliamentary Private Secretary to Anna Soubry, the Minister for Small Business.

Rudi Klein, chief executive of the SEC Group said: “There was a general consensus at the meeting that the issue of retentions is a cross-party issue.

“I firmly believe that the best way to get rid of this unfair and outdated practice of retentions in the construction industry is to put them out of reach of those withholding them by putting the money into a trust, and that’s what our amendments set out to achieve.”

After the meeting Mrs Abrahams said: “I have several examples of companies contacting me to say how retention money was withheld from them, typically 5 per cent of the overall contract, for months and months at a time.

“There is evidence that cash retentions have been used to shore up the working capital of local authorities and tier 1 suppliers and that’s very worrying.

“There is a key concern that if suppliers become insolvent, the small businesses in the supply chain are at risk of losing their retentions.

“We tell small and medium enterprises they are the backbone of our economy, so it’s time we started to do more to protect them from inappropriate late payment tactics from bigger businesses.”

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