Ban On Retention In Construction Contracts

In our previous blog, we covered the measures under consultation by the government to address retentions in construction contracts and to tackle late payments across all sectors. The government has now published its response: Late payments: tackling poor payment practices. Amongst other measures, the response includes:

• a proposed ban on retention payments in construction contracts;
• a 60‑day cap on payment terms for large firms paying smaller suppliers; and
• a statutory minimum interest rate on late payments at 8% above the Bank of England base rate.

The reforms aim to reduce the risk of insolvency for small businesses as a result of delayed or withheld payments and to improve cash flow across supply chains.