Construction retentions move into reform phase
The government has moved forward with plans to ban retentions in construction contracts, with implementation expected to take up to two years following further consultation and legislation when parliamentary time allows.
The Building Engineering Services Association (BESA) welcomed the decision and said the proposal followed the government’s Late Payments Consultation, which set out a wider package of payment reforms.
The consultation proposed prohibiting the withholding of retentions and also set out a maximum 60-day payment term, mandatory interest on late payments and stronger powers for the Small Business Commissioner to investigate and penalise poor payment behaviour.
More than 850 formal responses were submitted to the consultation, with a large proportion coming from the construction and engineering services sector.
BESA said it had been lobbying for reform on retentions and late payment practices for many years and took part in shaping the consultation.
Representatives from the Department for Business and Trade attended BESA’s Council meeting in September to hear from members about the effect of retentions and poor payment culture across the industry.
The association also submitted a detailed response to the consultation at the end of last year.
BESA sets out its response to construction reforms
David Frise, Chief Executive of BESA, said: “This is a landmark moment for our industry and a hugely significant step forward for BESA members and the wider engineering services sector.
“We have been campaigning for many years to end the unfair and outdated practice of retentions, which has placed an unacceptable financial burden on specialist contractors.”
“The government has listened to the concerns of our members and the wider industry.
“This decision has the potential to transform cashflow, improve business resilience, and create a fairer, more sustainable supply chain.”
“It is particularly encouraging that policymakers engaged directly with our members during the consultation process.
“That real-world insight has clearly helped shape a more robust and meaningful response.”
BESA said retentions have remained a long-running issue for SMEs in construction, with businesses facing withheld payments, delayed release of funds and, in some cases, the loss of retention money through upstream insolvencies.
Debbie Petford, Legal and Commercial Director at BESA, added: “We have been waiting a long time for meaningful reform backed by legislation, and the proposed ban on retentions is a critical part of that.
“Too many businesses have struggled or failed because they have been denied the lifeblood of healthy cashflow.”
“This consultation was a once in a generation opportunity to address poor payment practices, and it is extremely positive to see the government taking decisive action.
“The collapse of major firms in recent years has only reinforced how vulnerable smaller contractors are within the supply chain.”
“While there is still work to do on implementation, this is a major step towards creating a business environment where firms can thrive, not just survive.”
Construction consultation will continue on implementation
The government has indicated that further consultation will cover transition periods and a clear definition of retentions to stop their return in other forms.
BESA is encouraging members and the wider industry to continue engaging with the process as the final framework is developed.
BESA says construction retention ban marks long-sought reform
Iain Hoey
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Construction retentions move into reform phase
The government has moved forward with plans to ban retentions in construction contracts, with implementation expected to take up to two years following further consultation and legislation when parliamentary time allows.
The Building Engineering Services Association (BESA) welcomed the decision and said the proposal followed the government’s Late Payments Consultation, which set out a wider package of payment reforms.
The consultation proposed prohibiting the withholding of retentions and also set out a maximum 60-day payment term, mandatory interest on late payments and stronger powers for the Small Business Commissioner to investigate and penalise poor payment behaviour.
More than 850 formal responses were submitted to the consultation, with a large proportion coming from the construction and engineering services sector.
BESA said it had been lobbying for reform on retentions and late payment practices for many years and took part in shaping the consultation.
Representatives from the Department for Business and Trade attended BESA’s Council meeting in September to hear from members about the effect of retentions and poor payment culture across the industry.
The association also submitted a detailed response to the consultation at the end of last year.
BESA sets out its response to construction reforms
David Frise, Chief Executive of BESA, said: “This is a landmark moment for our industry and a hugely significant step forward for BESA members and the wider engineering services sector.
“We have been campaigning for many years to end the unfair and outdated practice of retentions, which has placed an unacceptable financial burden on specialist contractors.”
“The government has listened to the concerns of our members and the wider industry.
“This decision has the potential to transform cashflow, improve business resilience, and create a fairer, more sustainable supply chain.”
“It is particularly encouraging that policymakers engaged directly with our members during the consultation process.
“That real-world insight has clearly helped shape a more robust and meaningful response.”
BESA said retentions have remained a long-running issue for SMEs in construction, with businesses facing withheld payments, delayed release of funds and, in some cases, the loss of retention money through upstream insolvencies.
Debbie Petford, Legal and Commercial Director at BESA, added: “We have been waiting a long time for meaningful reform backed by legislation, and the proposed ban on retentions is a critical part of that.
“Too many businesses have struggled or failed because they have been denied the lifeblood of healthy cashflow.”
“This consultation was a once in a generation opportunity to address poor payment practices, and it is extremely positive to see the government taking decisive action.
“The collapse of major firms in recent years has only reinforced how vulnerable smaller contractors are within the supply chain.”
“While there is still work to do on implementation, this is a major step towards creating a business environment where firms can thrive, not just survive.”
Construction consultation will continue on implementation
The government has indicated that further consultation will cover transition periods and a clear definition of retentions to stop their return in other forms.
BESA is encouraging members and the wider industry to continue engaging with the process as the final framework is developed.
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