The results of the government’s consultation on the practice of cash retention under construction contracts will be published in April.
The consultation, which closed in mid-January, covered areas including:
• the effectiveness of existing prompt and fair payment measures for retentions
• research carried out for industry by Pye Tait
• late and non-payment of retentions
• the appropriateness of a cap on retentions
• the effectiveness of existing alternatives to retentions
• costs and benefits of a retention deposit scheme or trust account
“TICA support the wider Build UK ambition to abolish the practice of cash retention within our industry, and discussion has focused on the need to drive cultural change on this issue,” explains TICA CEO Marion Marsland who has attended Build UK briefings to discuss issues raised in the consultation. “There remains a mixed view as to whether or not legislation to protect retention monies would support the ambition to abolish retention. The Construction Supply Chain Payment Charter sets a 2025 timescale to abolish retention; Build UK members believe this should be brought forward to 2023. When discussing retention deposit schemes, understanding the importance to supply chains to mitigate risk of insolvency, we also need to support the timely release of retentions where no defects exist.
As Build UK members, TICA supports the view that industry needs to step up and resolve its own challenges, and that the Retentions Roadmap could be a significant stepping stone.
Indeed, the project to deliver Pre-Qualification Reform by the summer of 2018 was an excellent example of how significant progress can be made on long standing issues.
To achieve zero retention, there will be a requirement for detailed exploration and analysis of alternative forms of security, as well as improvements to quality to reduce the level of defects.”
TICA has responded to the Government consultation and is supportive of the wider Build UK position.
The results will be published on the government’s consultation website and members will be updated by TICA on retentions and pre-qualification reform throughout the rest of the year.