Small Businesses: Retention Debate
Full Debate: Read Full DebateLord Aberdare
Main Page: Lord Aberdare (Crossbench - Excepted Hereditary)Department Debates - View all Lord Aberdare's debates with the Department for Business, Energy and Industrial Strategy
(6 years, 6 months ago)
Lords ChamberTo ask Her Majesty’s Government, in the light of the loss of retention monies by small firms following the insolvency of Carillion, what steps they are taking to provide protection against such losses in the future.
My Lords, the Government are committed to improving payment practices. Our consultation on the contractual practice of cash retention, alongside a parallel consultation on the effectiveness of the 2011 changes to the Construction Act 1996, closed on 19 January. We are now considering the responses.
My Lords, retentions as currently practised mean that not only do small construction firms have to wait to be paid for work that they have done, often for several years, but that when a client company becomes insolvent they never get paid at all. Carillion alone held some £700 million of retentions, which its suppliers have now lost. Can the Minister assure us that immediate steps will now be taken to protect small firms from the loss of funds they are owed—for example, by ring-fencing retention funds in secure trust accounts? Will he look at the 10-minute rule Bill recently introduced in the other place by Peter Aldous MP, with widespread cross-party and industry support, as a possible approach to achieving this? When will something happen after all the promises we have had over the years?
My Lords, I agree with some of the noble Lord’s analysis about problems related to retention, a practice that is common within the construction industry but which has negative impacts. That is why we had the consultation, as I think he knows. We obviously want to consider the results of that consultation and in doing so we will look, as he has suggested, at Peter Aldous’s Bill and see whether it is appropriate that we can take further steps. But the consultation having been completed, we need to consider it first.