Back in July the government, in line with its manifesto commitment, published its consultation on tackling poor payment practices. This proposed “the most significant legislation to tackle late payments in over 25 years”. The consultation closed last month.

 Apart from retentions reform, the proposals were not construction specific. I’ll consider the options for retentions reform before discussing other matters that must be addressed in any future legislation.

One had a sense of déjà vu on reading the questions dealing with banning retentions or protecting them. There was a consultation on retentions back in 2017 following publication of research by Pye Tait commissioned by the Department for Business, Energy and Industrial Strategy (BEIS). The authors concluded that the most viable reform was a scheme to ring-fence the monies. This was favoured by the majority of respondents, despite misleading statements from BEIS that there was no consensus in the industry on the way forward.

The reality is that Build UK tier 1 contractors favoured a ban on retentions. They devised a roadmap to ban retentions by 2025, which was taken up by the Construction Leadership Council. We are well into 2025 and it seems that this was a roadmap to nowhere; supply chain retentions continue to provide an annual cash flow boost of £6bn to clients and tier 1 contractors.

Read more >>>