MP’s new Retentions Bill ‘can boost apprenticeships’

BESA fully support Peter Aldous’ Bill to protect construction SMEs

A new parliamentary Bill, being introduced under the Ten Minute Rule by Peter Aldous MP, has the potential to deliver thousands of new apprenticeships, according to the Building Engineering Services Association (BESA). The Bill’s first reading will be on January 9th.

The Bill seeks to amend the 1996 Construction Act to ensure retention money is held in a deposit protection scheme – thus ending the issue of upstream insolvency and the working capital it takes from the industry and SMEs. The average UK contractor has £27,500 withheld per year in retentions.

Payment retentions hurt thousands of small firms by limiting working capital and meaning they cannot train and hire apprentices. Retentions see £10.5bn of annual construction turnover withheld and £7.8bn unpaid in the last three years, further exacerbated by upstream insolvencies that cost £700m of retentions entirely lost through the supply chain in the same three years – this is almost £20m a month, £4.5m a week or £640,000 per day.

BESA Director of Training, Tony Howard, has calculated that in educational and skills terms, £27,500 per contractor per year “for an Apprenticeship Levy payer is the equivalent co-investment for 22 apprentices a year”. He continues: “And if you are a non-levy payer, that amount more than covers the salary for an apprentice, with a van, new tools and equipment and about £6,000 left over.

“When pulled back to a bigger picture, we are missing the opportunity for around 3,000 new apprenticeships in building engineering services alone, for money to sit in unsecured accounts. Let’s help our sector meet the Industrial Strategy by making this money available.”

Industry-wide backing

Peter Aldous has more than 20 trade bodies and organisations backing his Bill, alongside several MPs already co-sponsoring:

  • Sir Henry Bellingham MP (Conservative)
  • Alan Brown MP (Scottish National Party)
  • David Simpson MP (Democratic Unionist Party)
  • Ed Vaizey MP (Conservative)
  • Sir Mike Penning (Conservative)

Sir Henry Bellingham, MP for North West Norfolk, has long campaigned to improve apprenticeships. At Prime Minister’s Questions last Wednesday he even raised the issue with Theresa May: “Post-Brexit it will be absolutely crucial that we enhance skills and apprenticeships in the construction and housing sector?

“Does she agree that now is not the time for the Construction Industry Training Board to be proposing to close its site at Bircham in West Norfolk, putting at risk 600 jobs in a rural area? Will she meet me to discuss this, and will she help me in my campaign?”

Sir Henry went on to say: “It is the positive impact on SMEs and apprenticeships, skills and training that led me to sponsor Peter Aldous’ Bill.”

Government research shows contractors, if they had access to withheld retentions, would hire more apprentices. When asked what they would do with retention money if it weren’t withheld or lost 48% said invest in new equipment and facilities, 40% would look to take on more work, 29% would employ more apprentices and 22% would allocate the money to taking on their first apprentice.

BEIS data shows our sector represents over £89bn in the economy and infrastructure and enables a further £597bn of economic, output – or 43% of UK GDP at £808bn. Construction accounts for 9% of the total UK workforce at 3.1 million people, but over 50% of contractors report they have experienced non-payment of retentions in the past three years.

BESA applaud Peter Aldous for his Bill and while supporting him in every way possible, urge any stakeholders in apprenticeships to do so as well.