Insolvency call to DTI

Recent high-profile insolvencies have strengthened the determination of key industry players to get the DTI to adopt insolvency protection as a key part of the Construction Act.

"The recent Botes insolvency is another in a long line," said SEC Group chief executive Rudi Klein. "But the DTI appears to have conveniently decided to ignore insolvency protection even though Sir Michael Latham has previously said it should be addressed."

Klein strongly believes the Construction Act should provide for money to be held in trust to secure subcontractors payment in the event of contractor insolvency. It's an issue even MPs feel strongly about - before the parliamentary recess, 178 of them signed an Early Day Motion proposing that the Construction Act should be amended to include insolvency protection. Klein said more MPs would sign it on their return to Westminster this autumn.

"There is no clear reason why the DTI is not addressing the issue. In France and the US, the payer provides a bank guarantee or bond. Here, everyone asks for retentions, but no-one thinks about putting money aside in case they go bust."

[Contract Journal, 13 September 2006, p 2]