Minister rules out exemptions to retentions ban
Summary
The government has rejected calls to exempt certain construction contracts from its planned ban on retentions, arguing that the practice is ineffective at preventing defects and creates cashflow and insolvency risks. Ministers said they will instead work with industry during a transition period to develop alternative forms of surety, while also confirming 30-day payment requirements for contracts under the Procurement Act 2023.
Why it matters
Although the article focuses on construction procurement, changes to retentions and payment practices can affect defect risk management, contractor solvency and the reliability of remedial works on residential projects. Surveyors involved in contract administration, snagging, defect reporting or due diligence should watch for replacement mechanisms such as performance bonds and any knock-on effects on quality assurance.
Key points
- Government has ruled out exemptions to the planned retentions ban.
- Ministers say retentions do not effectively prevent or remedy defects.
- Industry will be expected to develop alternative surety arrangements.
- 30-day payment requirements will apply to contracts under the Procurement Act 2023.
- Peers raised concerns about defects, cashflow and unrecovered retention sums.
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