Specialists back move to end cash retentions

Specialist contractors have welcomed an initiative to strike out cash retention clauses from contracts and instead agree a retention bond - a conditional bond where the surety is an insurance company - as well as demands for payment within 30 days.

The National Specialist Contractors Council (NSCC) is calling on main contractors to end cash retentions as part of its Fair Payment Campaign, which aims to improve payment practices across the industry.

"Large sums of money being held back from a contractor can threaten its viability as a company," explained Ray Horwood, National Federation of Roofing Contractors chief executive. "This hampers investment in training and other initiatives that are of benefit to the industry as a whole.

"A contractor must have a responsibility to complete a job, but there must also be prompt payment."

Gordon Harris of Advanced Roofing and Flooring said the company now had the confidence to negotiate the removal of retentions on new contracts. "So far, this means around £60,000 remains in our cashflow," he added.

Explaining the campaign, Suzannah Nichol, NSCC chief executive, said: "Poor payment seems to be a norm in the industry, costing individual contractors money and creating inefficient building practices. It's also costing clients efficient delivery of projects.

"If money flowed through the supply chain everyone would be better off."

An NSCC survey has revealed that 43% of its members wait up to 60 days for payment, while the average retention owed to its members is £156,000.

To address this, it will launch its Fair Payment Campaign at a reception attended by construction minister Stephen Timms later this month, as well as pushing for certainty of payment to be included in the Construction Act.

Nichol continued: "We expect contractors who do a good job to be paid in full. Materials suppliers will stop deliveries if they're not paid in 30 days. Why should specialist contractors be any different and work without pay?"