{"id":894182,"date":"2026-03-25T04:14:00","date_gmt":"2026-03-25T09:14:00","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2026\/03\/25\/sector-hails-retentions-ban-but-delivers-loopholes-warning\/"},"modified":"2026-03-25T04:14:00","modified_gmt":"2026-03-25T09:14:00","slug":"sector-hails-retentions-ban-but-delivers-loopholes-warning","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2026\/03\/25\/sector-hails-retentions-ban-but-delivers-loopholes-warning\/","title":{"rendered":"Sector hails retentions ban but delivers loopholes warning"},"content":{"rendered":"
\n

Senior construction figures have hailed the government\u2019s ban on retention payments but warned that work needs to be done to guard against \u201cback-door loopholes\u201d.<\/span><\/p>\n

Today (24 March), the<\/span> Department for Business and Trade<\/span><\/a> (DBT) announced it will finally outlaw the use of retention payments \u2013 money withheld as security against defects or incomplete work \u2013 in construction contracts.<\/span><\/p>\n

The move, which follows a consultation launched last year, aims to protect smaller firms from losing out, especially when upstream contractors become insolvent or refuse to release funds.<\/span><\/p>\n

Iain McIlwee, chief executive of trade body the Finishes and Interiors Sector, told Construction News<\/i>: \u201cPayment issues and retention abuse have been a cancer at the core of construction.<\/span><\/p>\n

\u201cWe\u2019ve felt a bit like a broken record raising this issue and stating the obvious, but [without it] making an impact. It is frankly a relief to finally see this intervention<\/span>.<\/span><\/p>\n

\u201cOur reality is that negative behaviours have become the norm, and the legislative lever is imperative. So we applaud the government for taking this stand and setting the wheels in motion for change.<\/span><\/p>\n

\u201cWe appreciate this is not the end of all payment issues, but we do see it as the beginning of the end.\u201d<\/span><\/p>\n

The Electrical Contractors\u2019 Association (ECA), which has long lobbied for reform, called for the industry to work together in an effort to ensure the ban is not circumvented.<\/span><\/p>\n

ECA director of legal and policy Rob Driscoll said: \u201cThese measures will supercharge the supply chain, but the industry must come together and work to ensure there can be no back-door loopholes to get around the ban on retentions.\u201d<\/span><\/p>\n

The DBT has acknowledged that some firms might choose to ignore the legislation, but said this could be remedied through adjudication.<\/span><\/p>\n

It also identified that higher-tier firms might attempt to evade the ban by adjusting payments, specifying them later in the project schedule.<\/span><\/p>\n

\u201cThis circumvention risk is judged to be material but is not likely to outweigh the potential benefits to be gained through protecting retentions from insolvency and abuse,\u201d the department said.<\/span><\/p>\n

Rudi Klein, a barrister and former chief executive of the Specialist Engineering Contractors\u2019 Group, said it was crucial for the legislation to be drafted carefully to anticipate non-compliance.<\/span><\/p>\n

\u201cThe danger is that people try to avoid the impact by holding back money and calling it anything other than retentions. That is what they did in New Mexico, which is the only jurisdiction to completely ban retentions,\u201d he told <\/span>CN<\/span><\/i>.<\/span><\/p>\n

In New Mexico, \u201cclients and main contractors were undervaluing the work as they went through the contract bit-by-bit, and loading more payments towards the end of the contract\u201d, he noted.\u00a0<\/span><\/p>\n

However, Klein, who has campaigned on late-payment issues for years, welcomed the latest development.<\/span><\/p>\n

\u201cUK subcontractors will now be able to invest freed-up money into improving their services and products,\u201d he said.<\/span><\/p>\n

\u201cThere will be many clients that are concerned about the ban, but over time they will get a better deal.\u201d<\/span><\/p>\n

Mark London, senior partner and head of construction at law firm Devonshires, said that clients might look at alternative ways of protecting themselves against losses from defective work.<\/p>\n

He said: \u201cEmployers may look to stricter notice requirements or liquidated and ascertained damages (LADs) as an immediate start.\u201d<\/p>\n

London added that larger firms could \u201csimply end up coughing up a fine rather than losing their ability to apply pressure to contractors\u201d.<\/p>\n

In a joint statement from law firm Kennedys, Amanda Hanmore, partner, and Scott McKinnell, legal director, raised concerns that project costs could increase as a result of alternative payment security mechanisms, such as bonds being required.<\/span><\/p>\n

\u201cIt could [also] result in employers adjusting cost schedules to provide for payments more loaded towards the end of a project,\u201d they warned.<\/span><\/p>\n

James Butcher, deputy chief executive of the National Federation of Builders, said poor payment practices had \u201chindered growth\u201d and posed a \u201cpersistent challenge\u201d to the industry.<\/span><\/p>\n

\u201cAfter years of tweaks without teeth and promises without action, this government has acted swiftly to announce measures that the industry has spent decades calling for,\u201d he said.<\/span><\/p>\n

Reacting to the announcement of the ban, James Talman, chief executive of roofing body NFRC, said: \u201cThis outcome is one our industry has been campaigning for years to achieve.<\/p>\n

\u201cFor too long, specialist contractors have been forced to operate under a system that allowed larger firms to withhold their money, delay payment, and use their cash as free working capital.<\/p>\n

\u201cToday, the government has shown that it has listened, and we could not be more pleased.\u201d<\/p>\n<\/div>\n

Read More<\/a>
\n Nicola Harley<\/p>\n","protected":false},"excerpt":{"rendered":"

Senior construction figures have hailed the government\u2019s ban on retention payments but warned that work needs to be done to guard against \u201cback-door loopholes\u201d. Today (24 March), the Department for Business and Trade (DBT) announced it will finally outlaw the use of retention payments \u2013 money withheld as security against defects or incomplete work \u2013<\/p>\n","protected":false},"author":1,"featured_media":894183,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37979,23260],"tags":[],"class_list":["post-894182","post","type-post","status-publish","format-standard","has-post-thumbnail","category-hails","category-sector"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/894182","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=894182"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/894182\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/894183"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=894182"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=894182"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=894182"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}