£3m retention row at Scots Parliament

The Scottish Parliament is holding nearly £3m in retention money owed to contractors for work on the £414m Holyrood building project - three years after the scheme was completed.

The discovery was made in a written answer from presiding officer George Reid to SNP member Alex Neil, who asked how much cash had been withheld from contractors.

Reid revealed that the retention money was being held back from 27 of the 60 trade contractors used on the project, which was completed in March 2004.

"Final payments to trade contractors will continue to be made when the client considers that conditions for doing so have been met," Reid added.

Industry representatives greeted the news with disgust and questioned the need to withhold the money for so long, especially as they claim there were no workmanship issues on the project. They warned that companies could face severe cash-flow problems as a result of the delay.

A parliament spokesman, who was unable to reveal exactly what companies were owed money or the individual sums involved, denied claims that there were no workmanship issues.

However, he did admit that £2.7m was owed to contractors and that the client was still going through its defects paperwork.

"Don't underestimate the volume of paperwork that is involved in finalising accounts - the scale is huge. All claims have to be substantiated and scrutinised in detail, we also have to bear in mind the size of the project and that we are dealing with 65 different trade packages."

Specialist Engineering Contractors' Group chief executive Rudi Klein described the news as "disgusting".

"The decision to hold back this money is wrong and highly questionable. The problems on the Holyrood project have nothing to do with workmanship but the complexity of the design. Is it fair for small business to finance the parliament project?"

Newell McGuiness, managing director of SELECT, a trade association for electrical installers in Scotland, said he was "very concerned" by the news.

"It is disappointing to see the Scottish Parliament holding back this money due to contractors. This development will be on the agenda at our meeting with all the trade associations this week," he added.