Retentions; to be continued

Regrettably, the Withdrawal Agreement Bill is not the only bill that has struggled to progress through Parliament.

As detailed in our previous blogs (Private Members’ Bill introduced for construction retentions) and (The wait continues for retentions), on 9 January 2018, MP Peter Aldous introduced a Private Members’ Bill which sought to establish a government-approved retention deposit scheme. Such scheme was to both safeguard cash retentions from upstream insolvency and address the cash flow challenges within the construction industry through eliminating delays in the release of retention payments.

Unfortunately, the Construction (Retention Deposit Schemes) Bill failed to make its passage through the last Parliamentary session, and has not been carried over to the current session. As a result, the Bill will not become law.

So where does this leave contractors/sub-contractors who struggle to receive payment of their retentions?

Given the considerable backing for the Bill (280 MPs and 89 industry organisations had voiced their support), and the Government’s outstanding responses to both the Retention Payments in the Construction Industry and the 2011 Changes to Part 2 of the Housing Grants, Construction and Regeneration Act 1996 consultations, it seems likely that the matter will be resurrected once Parliament is less distracted.

In the meantime, to prevent loss of any retained monies, contractors/sub-contractors should first ensure they have a clear written contract for all projects. Next, remember that the Housing Grants, Construction and Regeneration Act 1996 outlaws both ‘pay-when-paid’ and ‘pay-when-certified’ clauses. Thus, release of a retention cannot be linked to either payment of the upstream contractor’s retention nor completion of its works. Finally, contractors/sub-contractors should consider utilising any contractual and/or statutory rights of suspension and adjudication where payment is withheld without valid justification.

If you have any questions regarding this topic, please contact Brenna Baye, or any other member of our Construction team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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