Construction Sector: Roadmap to Zero Retentions

Lord Lennie Excerpts

Wednesday 15th December 2021 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes a very good point. The vast majority of government departments no longer use retention clauses. The main exception to that is the Department for Education, and I continue to urge it to follow the lead of other departments in this regard.

[Lord Lennie (Lab)]

My Lords, in April, eight months ago, the Government stated:

“The Government, in conjunction with the Construction Leadership Council, is working to identify a sustainable strategy on retentions for the whole construction sector.”


Will the Minister update the House on where the strategy is? There may not be legislation, but is the strategy coming out?

[Lord Callanan (Con)]

There are a lot of different factors to take into consideration. This is a complicated area with widely differing views across the sector. In considering the abolition of this contractual practice, there would need to be the development of alternative surety products for the whole industry. That could mean the adaption of existing products, such as performance bonds, or the introduction of new products. It may also involve a range of different products. It is a complicated area, but we continue to take forward work with the Construction Leadership Council.

--- Later in debate ---

[Lord Callanan (Con)]

I am delighted to see that the noble Lord has turned up well dressed to ask such a noble question—he puts the rest of us to shame. My understanding is that the Ministry of Defence is one of the central government departments that has done much to abolish the use of retentions in its contracts.

[Lord Lennie (Lab)]

I will try again: could the Minister say whether he agrees or disagrees that retentions in the construction industry are an appropriate or proportionate mechanism for ensuring quality and fair payment?

[Lord Callanan (Con)]

I can answer that question by saying what we have done in central government in my department: we have substantially abolished them. Most government departments have now got rid of them and only the Department for Education is a laggard. We would be better to do without them, but that is not the same as moving towards a statutory ban.