Retentions could be phased out by 2005

The government has made a subtle climbdown over its stance on retentions by indirectly setting itself a 2005 deadline for their abolition.

According to the Specialist Engineering Contractors' (SEC) Group chief executive Rudi Klein, the government's response to the Trade & Industry select committee's report into retentions was "promising".

Published last week, the government stated that "the use of retentions is being reduced by the government setting an example as a client".

It added that the use of retentions could be reduced through its tough 2005 Achieving Excellence targets to deliver 70% of projects on time, within budget and defect free.

"I think this 2005 date is really a deadline for government to see off retentions. However, I still take issue over the links to defects and retentions as there is no evidence that joins the two," added Klein.

If the speculation of the hidden target is correct, the abolition of retentions would come two years earlier than the 2007 target SEC Group asked the government to stick to in the committee's original report at the beginning of the year.

"If you read between the lines it seems that government has now accepted that retentions should be removed from government contracts, but it would be too much of a climbdown to admit it," said Klein. "In contrast to a year ago the government has shifted its position and no longer seems to be a supporter of retention use."

In response, the select committee's chairman Martin O'Neill told CJ that there were "no immediate plans" to drag government officials before the committee over its response. However, the government's drive to meet the Achieving Excellence targets would be closely monitored.

Another committee member said the government's response was "as expected" and was "rather disappointing and inconclusive".

In a forthcoming meeting with cabinet minister Paul Boateng, which has now moved from 17 December to 7 January, the SEC Group will be asking for an immediate ring fence to be placed on retentions monies.

The  SEC Group is also looking to open parliamentary questions early next year for all 120 government departments and agencies to detail their use of retentions and when they plan to phase them out.