Legislation being piloted through the House of Commons privately by Peter Aldous MP to reform the practice of withholding retention monies in construction contracts has now been published
The Construction (Retention Deposit Schemes) Bill has just been published in time for its second reading on 27 April.
The so-called Aldous Bill stipulates that, unless the monies are protected, any clause in a construction contract enabling the deduction of cash retentions, will be invalid. Cash retentions will have to be safeguarded within a retention deposit scheme. The Bill will apply to the whole of the UK.
The rules for establishing and operating retention deposit schemes will be contained in the secondary legislation. Such schemes may simply provide a “custodial” service to ring-fence the monies or, instead, could provide insurance-backed alternatives. Schemes would be expected to provide quick and inexpensive adjudication or mediation procedures to resolve any disputes holding up the release of the monies.
The private member’s bill was introduced by Conservative MP, Peter Aldous, at its first reading on 9 January. It is the latest in a series of attempts made over many years by the Specialist Engineering Contractors’ (SEC) Group to overcome the abuse associated with the practice of retentions in the construction industry.
The Aldous Bill is supported by 80 organisations connected with the construction industry, and thousands of firms in the industry have contacted their MPs to drum up support for the Bill. If it passes its second reading it will go to Committee Stage and may be subject to amendments.