As mentioned in our blog of 7 November 2017 – Is your money being retained? Time to have your say – the Department for Business, Energy and Industrial Strategy is undertaking a consultation in relation to retentions in the Construction industry. The consultation follows a review by Pye Tait Consulting of the use of retentions within the sector, which highlighted the impact on the industry as a whole and on small and medium-sized enterprises (SMEs) in particular of both late and/or non-payment of retentions.
One of the solutions proposed by the Pye Tait review is a retention deposit scheme, and although the consultation has yet to conclude, earlier this week a private members’ bill was introduced to Parliament in relation to a construction retentions deposit scheme.
It is proposed that retention monies would be paid into a Government-approved scheme, thereby avoiding loss of the funds due to upstream insolvency. Further, any such scheme would eliminate delays in the release of retention payments to contractors. Overall, the changes to the retention regime proposed by the Bill would address the cash flow challenges within the Construction industry, thereby helping to boost a sector which it is feared will be negatively impacted as Brexit approaches.
Following its first reading on 9 January 2018, the Bill is scheduled for a second reading on 27 April 2018. While a draft of the Bill is awaited, the Government’s consultation remains open for responses until 19 January 2018. Thus, it is suggested that those affected by the proposed changes to the retentions regime should submit a response to the consultation, which can be found at https://www.gov.uk/government/consultations/retention-payments-in-the-construction-industry.
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