Helen Jones – 2015 Parliamentary Question to the Department for Business, Innovation and Skills

The below Parliamentary question was asked by Helen Jones on 2015-10-16.

To ask the Secretary of State for Business, Innovation and Skills, what estimate he has made of the total amount lost by small firms in the construction sector because of bankruptcies among firms holding cash retentions in each of the last five years.

Nick Boles

The Government does not collect data on the different types of unsecured debts and the creditors to whom they are owed across the full range of formal insolvency procedures.

The Government acknowledges that some people are unhappy with the system of retentions as it stands, but it is an embedded feature of the construction industry.

Therefore, our general approach is towork with the industry through the Construction Leadership Council and its supply chain payment charter; endorsing its commitment to zero retentions by 2025. Achieving this commitment will involve far-reaching changes to the way the sector works.

It is not clear that requiring money to be placed in trust funds is the best way to overcome any shortcomings in the system of retentions: it would impose a financial burden on construction clients, many of whom are themselves small businesses, and where there is financial weakness, may itself make insolvency more likely. The Government is commissioning research on the costs and benefits of the retention system and alternatives, including the use of trust funds. This will inform future action.