Delay to the Cash Retentions Bill

Construction / 02 May 2018

As we reported previously, the Construction (Retention Deposit Schemes) Bill received its first reading in the House of Commons in January.

Text of the Bill was published at the end of April in advance of its second reading, due to be heard on 27 April.

The Bill, acting on a recommendation from the Latham Report of 1994, aims to provide contractors and sub-contractors with security as to retentions through amendments to the Construction Act which would:

  1. make retention deposit schemes mandatory “for the purpose of safeguarding cash retention withheld in connection with construction contracts
  2. define “cash retention” as “monies which are withheld from monies which would otherwise be due under a construction contract, the effect of which is to provide the payer with security for the current and future performance by the payee of any or all of the latter’s obligations under the contract”;
  3. define a “retention deposit scheme” as one which “is made for the purposes of safeguarding cash retentions withheld in connection with construction contracts … and complies with the regulations …”; and
  4. extend the definition of “construction contracts” for the purposes of retention, so that it includes “any contract created to have a similar effect to a construction contract for the purposes of withholding monies which would otherwise be due under the contract.”

The second reading of the Bill has been delayed and will now be heard on 15 June.  We look forward to further updates, which will hopefully add clarity to the proposals – most notably the type of scheme envisaged by the changes and the contracts intended to be caught by the amended Act.

Follow our Blog for further updates in due course.


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