Government considers ban on cash retentions in construction

The UK government may ban retentions to improve cash flow in the construction sector.

Government plans to eliminate retentions in construction contracts

The UK government is considering a ban on cash retentions in construction contracts as part of a plan to address late payments. This proposal, which is part of a broader legislative effort to enhance conditions for small and medium-sized enterprises, has received support from industry leaders. Key figures, such as Rob Driscoll from the ECA and David Allen from the CECA, argue that eliminating retentions could help unlock capital and improve cash flow, fostering growth and innovation in the sector.

The potential abolition of cash retentions represents a significant shift in construction financing. Industry advocates see this as a chance to alleviate long-standing issues that hinder cash flow and stifle business growth. If successful, this could lead to more resilient companies and a better-equipped industry for future challenges. The involvement of government in this discussion is especially noteworthy, as it signals a willingness to reform longstanding practices that many deem outdated and detrimental to the sector's health.

Highlights

The success of these plans hinges on collaboration between stakeholders in the construction sector.