A public consultation on the use of retentions in construction contracts will take place in spring next year. This will be, in advance of any announcement on the matter in the Westminster parliament.
The move follows long-term campaigning by SELECT and the Specialist Engineering Contractors’ (SEC) Group, both of which have proposed placing all retentions into a trust-based deposit scheme.
Jamie Hepburn, the Scottish minister for business, fair work and skills, said in announcing the move: “Cash retention in construction industry contracts is common practice, including in the public sector. Its purpose is to ensure the contractor completes the job. However, it must be used proportionately and responsibly.”
Alan Wilson, acting managing director of SELECT, said: “We wholeheartedly support action on this troubling issue and look forward to positive developments in the upcoming Holyrood consultation”
Rudi Klein, chief executive of the SEC Group, said: “After many years, it seems that we are now making progress towards protecting cash retentions. It’s great to see the Scottish government taking the lead on this.”
Many in the construction industry have expressed concern about the abuse of retentions in contracts. Prompt and fair payment has been a long-standing issue and these are undoubtedly barriers to investment, productivity improvement and growth.
SELECT's 1250 member companies account for around 90% of all electrical installation work carried out in Scotland. They have a collective turnover of around £1 billion and provide employment for 15,000 people.