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Lord Aberdare pilots retentions abolition bill

8 Nov 21 Another attempt to outlaw the use of retentions in construction contracts has been launched.

Lord Aberdare
Lord Aberdare

The Construction (Retentions Abolition) Bill had its first reading in the House of Lords on 25th October 2021.

It is not considered likely to reach the statute book, however.

There is broad consensus among politicians that the use of construction clients withholding moneys owed to contractors until all work is completed to the client’s satisfaction has been widely abused across the industry over the years.

Twenty-seven years ago the Latham Report, by former Conservative MP Michael Latham, recommended that these retention moneys were held in a secure trust fund. Most of Latham’s recommendations were acted upon, but not that one.

The latest attempt to end retentions abuse is being led by crossbencher Lord Aberdare, who presented the bill. He is not the first to have tried.

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In 2017 SNP MP Alan Brown presented his Construction Industry (Protection of Cash Retentions) Bill. In 2018 Peter Aldous, a Conservative MP, introduced the Construction (Retention Deposit Schemes) Bill. Both attempts failed.

Successive governments have made warm noises but have refused to support reform with any practical action.

The House of Commons debated the issue in February 2020. At that time Nadhim Zahawi was briefly the business minister with responsibility for the construction industry. He explained the government’s position. “It is important that any action we take is robust, proportionate and evidence based, which is where we are at the moment,” he said. “Several policy options are under consideration, including the retention deposit scheme. It would be premature to commit to anything at this stage while several policy options are under consideration.”

He added: “Unfortunately, the lack of consensus to date means that a preferred solution has not yet emerged. We will continue to work with stakeholders and I would like to think that we can get to a place where we have that consensus.”

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