Retentions – The Aldous Bill published

The Construction (Retention Deposit Schemes) Bill or ‘Aldous Bill’ has been published.

The bill seeks to amend the Construction Act 1996 by introducing provisions which specify that any clause purporting to allow cash retentions will be of no effect if the withholding payer has, upon withholding such monies, failed to deposit them in a government-approved retention deposit scheme. Furthermore, the withholding payer will have to notify the payee of the scheme administrator’s name and contact details and the scheme administrator of the payee’s. Failure to take either of these steps will cause any retained monies to become refundable within seven working days of the date on which they were originally withheld.          

The bill provides for detailed regulations to be drawn-up which, among other things, will set out the mechanism by which retention deposits are to be released from the scheme. The precise workings of that mechanism are therefore currently unknown. That said, the retention deposit scheme will likely be modelled on the tenancy deposit scheme introduced by the 2004 Housing Act (with retention monies only being released to the appropriate parties following their agreement or after resolution by an adjudicator of any disputed amounts).

The Aldous Bill is notable for being a private members’ bill (i.e. put forward without formal government backing) and while such bills usually fail to make it into the statute book, the recent collapse of Carillion has made this bill seem very timely (the bill actually predates Carillion’s liquidation). It has so far managed to attract a degree of cross-party support and, by some counts, over 60 trade associations have now expressed their backing for the bill. However, certain bodies have withheld their support, some of them on the grounds that cash retentions should instead be abolished outright.

The bill will receive its crucial second reading in June (pushed back from its original scheduled reading date of 27 April). 

Whether the bill ultimately becomes law remains to be seen but its very existence at least serves to highlight the growing appetite for reform both from within and outside the industry.            

Click here to see the full text of the published bill  []

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