Private Bill proposes to end cash retentions

Brenna Baye of our Construction & Engineering team recently spoke to Construction Law regarding the proposed Construction (Retentions Abolition) Bill 2021-22.

A Private Member’s Bill proposing to abolish cash retentions within construction contracts has had its first reading in the House of Lords. Lawyers suggest outlawing retentions is not the answer and the Bill is unlikely to make it through Parliament.

The Construction (Retentions Abolition) Bill introduced by Lord Aberdare looks to outlaw the practice – common within the construction sector – of allowing the paying party to withhold as security against the risk of contractual non-performance sums which would otherwise be due.

This latest attempt to tackle the issue of retentions comes after Conservative MP Peter Aldous’ Construction (Retention Deposit Schemes) Bill failed to complete its passage through Parliament two years ago. It sought to safeguard construction suppliers’ cash retentions through the establishment of mandatory retention deposit schemes.

The new Bill goes further by proposing to amend the Housing Grants, Construction & Regeneration Act 1996 to provide that any clause enabling a payer to withhold retentions in a construction contract entered into after the passing of the Bill would take no effect…

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Brenna has written a series of blogs on retentions, available on our website:

• November 2021: The return of the debate on retentions
• October 2019: Retentions; to be continued
• January 2018: Private Members’ Bill introduced for construction retentions
• November 2017: Is your money being retained? Time to have your say