Cash retention under construction contracts: consultation analysis

5. Next Steps

This consultation has clearly illustrated the breadth of views within the sector on the practice of cash retention and it has identified some possible policy options to address the problems associated with their use.

In the last few months we have seen an unprecedented level of collaborative working across the construction sector, including rapid co-design, consultation and communication of working practices and contract administration to support industry restart and recovery in the midst of the COVID 19 pandemic. We aim  to use the strengthened spirit of collaboration demonstrated through the work of the Construction Leadership Forum to build consensus within the construction industry where possible on how to resolve the problems associated with cash retentions.  

The consultation has confirmed that there is a need to investigate further a fairer, more neutral and more protected approach to assurance in construction contracts.  Organisations which commission construction work must have the ability to avoid becoming liable for costs arising from unmet contract performance by implementing a means of assuring it. We propose to work with the industry to carefully consider the emerging policy options including; the possibility of a retention deposit scheme, the phasing out of retentions completely or the viability of alternative mechanisms of assurance. 

We will also continue to monitor the work of the UK Government following their own consultation on the practice of cash retention in 2017.