The Construction (Retention Deposit Schemes) Bill has been published with its second reading on the 15 June 2023.
The Bill’s momentum has grown, probably rather unsurprisingly, following the collapse of Carillion. With more than 100 MP’s, including defence secretary Gavin Williamson, shadow chancellor John McDonnell, Liberal Democrat leader Vince Cable and Green Party leader Caroline Lucas backing it in recent weeks. If the Bill passes its second reading it will go to Committee Stage for a detailed consideration of its provisions.
If passed into legislation the Bill would add two new sections 111A and 111B to the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA 1996”). Within the Bill there is also an expanded definition of ‘construction contract’ in this context, being a construction contract as defined by HGCRA 1996, section104 or ‘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 Bill is aimed at safeguarding cash retention withheld in connection with construction contracts. It would do this by ensuring that retentions are held in a third party trust scheme. The Bill stipulates that, unless the monies are protected, any clause in a construction contract enabling the deduction of cash retentions would be invalid.
The Bill will apply to the whole of the United Kingdom and it appears that it will be retrospective. If it is retrospective, then any contracts executed prior to the Bill coming in force would require all existing cash retentions to be placed in a retention scheme, if this is not complied with, then the retention must be returned to the payee within seven working days.
To read the Bill please click here.
This briefing note does not constitute legal advice: individuals should seek professional advice, specific to their own circumstances, in relation to any matters raised.