Construction Sector: Cash Retention

Oral Answers to Questions — Business, Innovation and Skills – in the House of Commons at 11:30 am on 15th September 2015.

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Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

We are working with the industry through the Construction Leadership Council and its supply chain payment charter, which includes a commitment to zero retentions by 2025.

Photo of David Simpson David Simpson Shadow DUP Spokesperson (Business, Innovation and Skills), Shadow DUP Spokesperson (Environment, Food and Rural Affairs)

I am sure the Minister will agree that cash retention is having a major difficulty on the cash flow of SMEs across the United Kingdom. Surely some form of sanctions needs to be in place to alleviate cash-flow problems when companies are going out of business.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

I certainly agree that there are some problems with the system, but it is also a fairly deeply embedded feature of the construction industry. We must act on the basis of evidence, which is why the Government will commission an analysis of the cost and benefit of retention payments to inform future action. We endorse entirely the Construction Leadership Council’s commitment to remove such payments from the industry by 2025.

Photo of Chris Leslie Chris Leslie Labour/Co-operative, Nottingham East

With last week’s construction output figures going backwards, and with so many small construction firms facing cash-flow difficulties, is it any wonder that the house building programme in this country has been so lamentable? Do we need to do more to help SME construction firms, for example with a help-to-build underwrite of some sort behind that loan finance for small building companies? We should not just avoid adding to borrowing; we should make a real difference for those construction firms, particularly small ones.

Photo of Nicholas Boles Nicholas Boles The Minister for Universities and Science, Minister of State (Department for Business, Innovation and Skills) (Jointly with the Department for Education)

We certainly want to support a range of construction firms, both small and large, but it would have been nice if the hon. Gentleman had taken advantage of his Back-Bench position to reflect a little more openly and honestly on the legacy of the last Labour Government, which saw the construction industry crushed.

Housing starts are up by 50% from the low that was achieved at the end of the last Labour Government. There is a lot further to go, and we will work closely with construction firms to make that progress, but let us be honest about where the industry started.

Photo of Margaret Ritchie Margaret Ritchie Social Democratic and Labour Party, South Down

Will the Minister and his colleagues hold a range of discussions with their colleagues in the Treasury and Her Majesty’s Revenue and Customs, to discuss the need to reinstate the aggregate levy scheme, and particularly the exemptions, as that would assist the construction sector and the cash-flow situation for industries in Northern Ireland?