McDonald demands action on cash retentions

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Local MP Stuart McDonald wants the UK Government to find a way to resolve the impact of cash retentions on small construction firms.

Cash retentions involve holding back money from payments as security in case a firm does not return to rectify defects, but the system is widely abused.

Mr McDonald, who represents the constituency of Cumbernauld, Kilsyth and Kirkintilloch East, has logged a parliamentary question requesting the government’s policy on the non-release or late release of cash retentions in the construction industry. Margot James, the Minister for Small Business, responded that a government review of retentions will soon be published. Also, a review of the Construction Act will consider legislation on the ring-fencing of retentions.

She said: “Unjustified late and non-payment of a retention payment for any amount owed is unacceptable. These practices cause particular problems for small businesses in the construction sector, and the Government are committed to tackling them.”

Industry body the Specialist Engineering Contractors’ Group found £1 billion was held in this way. Spokesman Alan Wilson said: “Cash retentions often represent the profit margins of thousands of thousands of small firms.”