Specialist contractors have called on the government to appoint a ministerial “tsar” to enforce payment standards and encourage supply-chain integration among firms working on public sector contracts.

The call for a payment champion was made at Monday’s session of the House of Commons’ select committee on Business, Enterprise and Regulatory Reform, which is conducting an inquiry into the construction industry.

The specialists were particularly concerned with main contractors’ practice of withholding retentions from subcontractors on local authority contracts.

Graham Wren, executive director of Balfour Beatty Ground Engineering and a past president of the National Specialist Contractors Council, said: “A lot of government departments have a policy of no retentions, but it’s not enforced with contractors. Almost 100% are holding retentions where they are doing work on government projects.”

On hearing the evidence, the MPs on the committee acknowledged that taxpayers were effectively giving main contractors an “interest-free loan”.

Departments have a policy of no retentions, but it’s not enforced with contractors

Graham Wren

Rudi Klein, chief executive of the Specialist Engineering Contractors Group, said after the hearing that the “integration tsar” needed to be “somebody high-profile – a business person, who’s done it all, knows what it’s about and can drive this process”.

Suzannah Nichol, the chief executive of the National Specialist Contractors Council, said a minister was not needed, but there should be a champion to enforce standards.

She said: “Someone needs tell people how to set minimum standards. There are directions, but they’re not being read.”