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Construction (Retention Deposit Schemes) Bill

Current Stage: 2nd reading

Last updated: 21/03/2019

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Overview

This bill aims to protect retention deposits in construction contracts by establishing mandatory retention deposit schemes across the UK. It requires that any money withheld as a retention deposit is placed in a government-approved scheme, protecting contractors from non-payment should the client default.

Description

The Construction (Retention Deposit Schemes) Bill amends the Housing Grants, Construction and Regeneration Act 1996. It mandates the creation of retention deposit schemes, overseen by the relevant national authority (Secretary of State for England, Welsh Ministers for Wales, and Scottish Ministers for Scotland). These schemes will safeguard cash retentions—money withheld from payments to contractors as security for contract completion—and facilitate dispute resolution. Regulations will cover scheme administration, funding, and the release of deposits. Crucially, any construction contract clause allowing retention withholding will be void unless the money is immediately deposited into an approved scheme, and both the payer and payee are notified of the scheme administrator's details. Failure to comply will result in a mandatory refund to the payee within seven working days. The bill also extends its provisions to Northern Ireland through an Order in Council.

Government Spending

The bill doesn't directly specify government spending. The cost will depend on the administrative and regulatory burden of establishing and overseeing the schemes and any necessary dispute resolution mechanisms. No figures are provided in the bill itself.

Groups Affected

  • Contractors (payees): Benefit from increased protection against non-payment of retention monies.
  • Clients (payers): Face additional administrative obligations and potential costs associated with using the schemes.
  • Scheme Administrators: Will be responsible for managing the schemes and resolving disputes, potentially generating revenue.
  • Government: Will incur costs associated with regulation and oversight.

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