Richard Brackenbury

Head of Construction

Construction Law

Retentions in construction contracts – the end in sight?

Richard Brackenbury

The second reading of the Construction (Retention Deposit Schemes) Bill has been given a revised date of 15th June, when the construction industry’s existing retentions system will be reviewed in light of the lessons learned in the collapse of Carillion at the start of this year.

The Construction Bill has received the support of major trade bodies, including the Federation of Master Builders and the Federation of Small Businesses. This is the biggest industry coalition ever formed on the topic of late and unfair payment, and with growing political support, we could expect to see significant reform on the horizon.

Proving that every cloud has a silver lining, over 70 trade bodies came together in support of the Construction Bill following the collapse of Carillion, which could bring about a much wanted change in the construction industry.  

If you’re involved in the industry, you will know all about retentions. Technically, they are a percentage of each instalment due to a contractor/subcontractor that is withheld until the end of the job, to give security that you they will return to put right any defects.

In reality, they are a major source of contention, being seen as yet another way of major contractors abusing their financial position and simply refusing to pay them back. That was just one of the issues for which Carillion has been lambasted.

The bill calls for cash retentions to be held in trust accounts, in order to protect the supply chain. This currently has the support of over 120 MPs and 76 trade bodies.

Despite being pushed back from April to June, the matter is still as pressing as ever, the topic affecting supply chains from sectors including electrical, plumbing, heating, housebuilding, roofing, interiors, scaffolding and demolition.

If you’re interested in any of the topics raised in this article, or for more information regarding retentions, please call to speak to one of the team on 0115 9888 776.


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