Business Transactions: Cash Retentions

Anna Soubry Excerpts

Wednesday 27th January 2016 Westminster Hall

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

It is a pleasure to serve under your chairmanship, Mr Crausby. I pay tribute to the hon. Member for Upper Bann (David Simpson) not only on securing the debate but on the powerful speech that he made. There have been many interventions, and powerful points and arguments have been made.

This has been a good debate, although it has not been a real debate, because we have not heard anybody who does not agree that there are strong and powerful arguments for taking action on the problem of cash retentions. Hon. Members are probably getting the drift of the fact that in some ways, they are banging at an open door with this Minister. I absolutely understand the arguments about the need for reform, including the powerful arguments this morning.

I want to mention someone who came to see me, Mr Simon Bingham, who is head of one of the small businesses that the hon. Member for Upper Bann referred to. Mr Bingham’s business is just 100 metres over the constituency border in the seat next to mine, which is held by the hon. Member for Ashfield (Gloria De Piero), so strictly speaking he should have gone to her, but he came my way because I made an error, and we had a great conversation. He has a company called Caunton Engineering Ltd. He also chairs the contracts committee of the British Constructional Steelwork Association, and he gave me the real-life evidence that the hon. Member for Upper Bann referred to, because he lives in the real world with the outdated way of doing things that we have heard about.

There are good reasons and arguments for having some sort of retention. I do not think any of us disagree with that. We know about snagging, and the faults that exist, and things that have not been done properly that come to light only six months after the completion of work on a contract, or even later. There needs to be provision so that such things can be rectified. As the hon. Gentleman and, I suspect, the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) know, in major construction projects, such as the recent tram project in my constituency, problems occur and we need a device to make sure the job is properly done and finished.

Equally, we know from our experiences that in the case of large housing developments, bonds are put in place at the beginning of the process, before the first sod is turned, to ensure that if the developer or builder gets into difficulty, funds will be available to make sure that the roads are properly finished. I have an example in my constituency, which I will not bore hon. Members with, but bonds are specifically put in place at the insistence of local authorities so that roads are completed and all the other work is done, and so that money is available in the event of somebody going under or some other catastrophe happening.

I cannot understand why a similar scheme cannot be operated in the construction industry. That sounds like good news, but I may be about to disappoint hon. Members. I fervently ask hon. Members not to seek to amend the Enterprise Bill, only because we have launched a review. I am grateful to Andrew Wolstenholme, the chief executive of Crossrail, who absolutely understands the problem and has agreed to oversee the review. It will be an extensive review that will take evidence and look at evidence, but its work will not be completed until the end of this year, when its recommendations will go out for further consultation. I accept that it could be said that that is an inordinate length of time, but I promise that I will look at the time that we have currently given to that review, because there is a growing feeling among all parties that we really need to get on and sort it out.

[Debbie Abrahams]

The review seems like good news. I am sure the SEC Group and others who, like me, have been campaigning on this issue for five years will see it as good news. However, promises have been made in the past, and there will be concerns that this will be seen as yet another prevarication to address the issue.

[Anna Soubry]

It could never be said that this Government would prevaricate in any way or seek to knock things into the long grass.

[Jim Shannon]

The Minister would never do that.

[Anna Soubry]

Never. I can absolutely assure the hon. Lady that I take the issue very seriously and know that we need to make progress. There are reasons why we would want some sort of retention, but not in a way that is onerous, particularly for small businesses. As I said earlier, Simon Bingham came to see me and gave me real-life examples of how some of the bigger companies effectively use retentions for their cash flow. The money can sit with them for year after year, and the small business takes a serious hit.

[David Simpson]

I accept what the Minister is saying, and it will be of some comfort to some companies. However, she will surely agree that large companies should not be allowed to hold on to money and use it to their own advantage to build their own businesses while small companies suffer.

[Anna Soubry]

I absolutely agree with the hon. Gentleman. What happened yesterday with the Groceries Code Adjudicator has already been mentioned. I am grateful for the comments of the hon. Member for Strangford (Jim Shannon) on that. It was a very important day to see the Groceries Code Adjudicator not holding back, not pulling any punches, and absolutely making it clear that Tesco had flagrantly breached the groceries code in a way that was completely unacceptable. That will have consequences for Tesco, although it will not be subject to a fine because the provisions have only just come in. I pay tribute to the Groceries Code Adjudicator. Bigger companies have got to learn and understand that none of us will tolerate their not playing fairly and properly, especially in relation to smaller businesses.

Our definition of smaller businesses, which is accepted by everybody, is any company that employs fewer than 250 people, so they can be quite large small businesses, not just sole traders who might employ one or two people. My officials are keen for me to say that the Government tell various agencies that when they handle taxpayers’ money, they must follow guidance and not engage in poor practices. It is not mandatory, but we provide subtle hints and nudges. Apparently the Highways Agency does a good job, but not everybody does, so there is much more work to be done. I undertake to take the matter forward with my officials to see whether we can make progress.

Good points have been well made today. Such practices must be brought into 2016. We must make sure we do the best thing by our small businesses.

[David Simpson]

We can all sympathise with the companies in their difficulties with banks and so on, but sympathy does not get the job done. That is what the companies tell me when I meet them. I can go on to the next case or deal with another constituency issue, but they want action. I am grateful for what the Minister has said thus far, and I trust that the Government will deliver on it.

[Anna Soubry]

I could not have put it better. I will definitely see what progress we can make. I am happy to continue to work with the hon. Gentleman and with the hon. Member for Oldham East and Saddleworth to try to sort this out once and for all and as soon as possible.

Question put and agreed to.