Construction Sector: Cash Retentions

Lord Londesborough Excerpts

Monday 11th December 2023 Lords Chamber

[Lord Offord of Garvel (Con)]

As the noble Lord from the Cross Benches said, there are many suggestions as to how we go about doing this, and this is another one. On statutory bans on cash retentions, my department is fixated on trying to remove regulation from business, not increase it. We are looking to the industry to come forward with viable plans on how to make this work. Progress is being made and more can be done, but there is still not complete consensus on how to move this forward.

[Lord Londesborough (CB)]

My Lords, can the Minister explain why the Government are dragging their heels over the anti-enterprise practices of cash retentions and late payments, especially as SMEs in the construction sector are running the highest rate of insolvencies of any sector in this economy? Over the last three decades, the SME market share has dropped in new housebuilding from 40% to less than 10%, leaving the big housebuilders to increasingly dominate a sector that continually fails to meet demand. Why is there not more urgency?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. There is urgency, to the extent that we are consulting the industry, which has demonstrated that it can improve these terms. We have put the road map together and it is being worked on, but we need consensus in the industry to do that. I understand the concerns of SMEs, but transparency on data, as well as a metric system which shows more transparency and more independent KPIs on work being delivered, will go a long way, and that is what the road map envisages.