December 2023

Viewpoint: Retentions
Continued from page 26
retention fees during the course of a year.
Although perhaps not such an issue for larger
companies, for lesser-established contractors,
receiving or being withheld a project fee could be
the difference between staying in business and
bankruptcy.
Industry consultation
The Construction Leadership Council (CLC) is
addressing the retention issue as part of a survey
to discover how payment reporting is working
within the sector. This will help inform a
government consultation: ‘Amendments to the
Payment Practices and Performance Regulations
2017’. The regulations were devised to ensure
large business compliance in respect of prompt
payments. With the legislation due to expire in
2024, the consultation will help decide whether it
should continue beyond that date.
In data published by Build UK under the
government’s ‘Duty to Report on Payment
Practices and Performance’, there are positive
signs for payees since the information was first
reported in July 2018. It revealed a reduction in
the average time invoices were paid, from 45
“For lesser-established
contractors, receiving
or being withheld a
project fee could be
the difference between
staying in business
and bankruptcy”
days to 30 days. It also showed the number of
invoices being paid within 60 days increased
from 63% to 80%. As part of its advocacy for a
shake-up of construction industry payment
regulations, Build UK has also devised a roadmap
that proposes a move to zero retentions by no
later than 2025.
Transformative change
Thanks to initiatives instigated by the likes of the
CLC and Build UK, the case for a revision of late
payment practices continues to strengthen
throughout the industry. But complacency will not
lead to a positive outcome. Speaking to
‘Construction Management’ website, Steve Bratt,
Chair of the CLC Business Models Workstream,
said much work was needed to deliver ‘next level
transformative change’ to improve payment
behaviours.
According to Steve, who is also Chief Executive of
the Electrical Contractors Association, a step in
the right direction in respect of transparency
would be for a widening of the Duty to Report on
Payment Performance Regulations to include the
value of retention payments made, as well as the
volume. I agree. Being found to maintain a
veritable mountain of retention payment to
smaller businesses would not represent a good
look for any of our large contractors. But would it
solve the issue in the long run? I’m not so sure.
For my part, I’ve been feeding my thoughts and
that of other roofing contractors to the NFRC
regarding the retention process. So, let’s hope we
see real progress on this long-standing matter
before long.
Contact BriggsAmasco
briggsamasco.co.uk
0121 502 9600
Briggs Amasco Ltd
28 TC DECEMBER 2023