Nearly a third of engineering services contractors have up to 10% of their turnover locked up in retentions.
The full impact of the retentions system is highlighted in the latest trade survey by trade bodies BESA, ECA and SELECT.
Six in ten firms said that “a substantial portion of their turnover is currently being held by firms up the supply chain.”
The stark figures have prompted further calls for reform by industry leaders as the government embarks on its latest industry consultation.
BESA Deputy CEO Bruce Kirton said: “It has been a source of frustration and fury in our sector for decades and, despite upwards of 20 government-backed ‘measures’ or voluntary ‘initiatives’ it continues to threaten the very existence of many SMEs.
“The government has launched yet another consultation on this issue, but the evidence is already overwhelming.
“Legislation that ensures retention monies are protected and used for the purpose for which they are intended is long overdue.”
ECA CEO Steve Bratt said: “In addition to being at risk from upstream insolvency, smaller businesses can’t invest enough in skills or equipment, or help to improve industry productivity, if their cash flow is restricted in this way.”
SELECT Managing Director Newell McGuiness added: “Retentions remain a blight on the construction industry.
“Retention sums are often withheld for longer than necessary and are often not repaid in full if at all. It is vital that changes are made to protect businesses from this archaic practice.”
The three sector trade bodies have advocated that cash held in retentions by clients and main contractors should be held in trust, at the earliest opportunity.
from Construction Enquirer http://www.constructionenquirer.com/2017/11/17/me-specialists-suffering-from-blight-of-retentions/
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