WIREDGOV

Findings of a public consultation on the practice of cash retention in public and private sector construction contracts in Scotland and to gather views on the findings of the supporting documentation.

We sought your views on the practice of the cash retention system in Scotland, a long-standing practice in the construction industry throughout the UK. A retention is money withheld from payment of a construction project. The Pye Tait report on Retentions in the Scottish Construction Industry, was published in conjunction with the opening of the consultation process. It illustrated the benefits and challenges with retentions, in particular understanding the extent to which this practice has positive but also negative impacts and what solutions would be effective and proportionate in addressing these.

You Said The consultation received 33 responses. 25 were from organisations, mostly who were sub-contractors and clients. There were 8 responses from individuals.

When asked whether ‘some form of assurance is needed in construction contracts’, the response was almost unanimous: 94% agreed with this and only 6% disagreed.

However, a majority of respondents thought that the current practice of cash retention was not ‘the best form of assurance within construction contracts’ but the majority of respondents fully agreed or partially agreed that a ‘retention deposit scheme’ and/or holding retentions in trust could eliminate some of the critical issues associated with their use and provide surety against defects.

We Did The responses to this consultation along with our stakeholder event held on 5 March 2020 have helped to provide a greater understanding of the issues associated with the practice of cash retention in construction contracts in Scotland. We will use the outputs from both to help inform our work in this area and we will form a short life working group to carefully consider the emerging policy options including; the possibility of a retention deposit scheme, the phasing out of retentions completely or the viability of alternative mechanisms of assurance

Practice of Cash Retention Under Construction Contracts: Public Consultation Findings 47 page PDF, 932.6 kB