Consultation on retentions is welcomed by SELECT

SELECT has welcomed the Scottish Government’s announcement of an industry-wide consultation on the use of cash retentions in construction.

The move follows a massive ongoing campaign by SELECT, working in partnership with the Specialist Engineering Contractors’ (SEC) Group.

SELECT and SEC Group Scotland have been carrying out extensive lobbying amongst members of the Scottish Parliament to encourage them to support legislation to ring-fence the monies.

SELECT Managing Director Alan Wilson said that all firms in Scotland’s construction industry would now be encouraged to participate in the consultation, which closes on 25 March 2020.

Alan, who is also National Executive Officer of SEC Group Scotland, said: “Our message is clear: Cash retentions must be put in a ring-fenced account or scheme.

“In this way we are more likely to see the end of a 200-year-old practice which has been abused to the detriment of small firms which often wait years to get their retentions released.”

The new consultation comes after a review of the system of cash retentions carried out for the Scottish Government by consultants Pye Tait.

Cash retentions are deducted from due payments, ostensibly as security in case a firm fails to return to remedy non-compliant work.

In practice, the monies – which belong to the firms from whom they have been withheld – are used to bolster the cashflow of large companies and even public sector bodies such as local authorities.

Various estimates put the loss of cash retentions from the Carillion collapse in 2018 as between £¼ billion and £½ billion.

SEC Group Scotland has reminded the Scottish Government that in a 2013 review of public sector construction, a recommendation was made that cash retentions should be kept in trust.