Collapse of oldest building company confirms financial crisis, say contractors' group

The Specialist Engineering Contractors’ (SEC) Group has warned that the collapse of Britain’s oldest building company is further confirmation of the financial crisis affecting the construction industry.

The SEC's warning comes after Durtnell & Sons, owned by the same family for almost 430 years, went into insolvency with very little left in its coffers. Durtnell, says SEC, will become just another statistic in a wave of insolvencies affecting the construction industry, making it the sector with the highest number of insolvencies.

The group says that when construction firms go into insolvency, the retentions withheld from their supply chain are invariably lost. An examination of Durtnell’s March 2019 accounts shows that retentions totalling £630,000 were owed to the firml, but the bulk of those retentions would have been deducted from their supply chain payments. Moreover, the low level of retentions for their Brighton project (only £10k for a £21m project) suggests that Durtnell owe substantially more to their supply chain. 

At the top of the industry, according to SEC, extremely weak balance sheets of the largest UK contractors are creating a ‘ticking time-bomb'. Trade credit insurers are now withdrawing cover from many of these companies leaving their supply chains wholly exposed.

To help guard against this, Peter Aldous’ Bill: Construction (Retention Deposit Schemes) Bill was introduced in January 2018 asking for retentions to be ring-fenced in a secure account. Retention monies are monies deducted as security in case a firm fails to rectify non-compliant work. In practice they are deducted to bolster the working capital of the party withholding them or even to be invested in the overnight money markets. However, the Aldous Bill is currently in limbo following the Brexit disruption to the parliamentary timetable.

Rudi Klein, SEC Group CEO, said: “Whilst it is extremely sad to lose such a long-established firm, there is now concern for Durtnell’s sub-contractors. The retention monies belong to the businesses, mostly SMEs, in Durtnell’s supply chain and for the most part would have represented their profit margins. The government must now act to adopt the Peter Aldous Bill, already in parliament, that protect these monies from upstream insolvencies.”