Retention payments in the construction sector
The retention system has featured in the construction sector for over 100 years and is a contractual practice originally introduced to provide security against defective work or the insolvency of construction firms.
Most building contracts and sub-contracts entitle the employing party or client or a contractor to keep a percentage, typically around 5%, of the value of the work carried out until completion or making good of defects.
Research by the UK Government showed that unjustified late and non-payment of retention monies was a significant issue for some contractors. The research also showed that delays in paying retentions become more significant further down the supply chain.
The Committees examined the use of retentions in Wales, and the UK more widely. The inquiry considered the following:
- to what extent retentions are an issue for companies based and/or operating in Wales, including how issues might differ through the supply chain;
- whether there are any benefits to the use of retentions;
- alternatives to the use of retentions and what role the Welsh Government could play in developing and delivering those alternatives.
Following the evidence session the committees jointly wrote to the Minister for Economy, Transport and North Wales
Letter from the Minister for Economy, Transport and North Wales
Date, Agenda and Minutes
1. Professor Rudi Klein, Barrister, Head of Specialist Engineering Contractors’
Catherine Griffith-Williams, National Executive Officer for Wales, SEC Group
Kyle Spiller MCIOB, Director of SAM Drylining Ltd (representing Chartered
Institute of Building Wales)
Ifan Glyn, Senior Hub Director/Wales Director, Federation Of Master Builders
Business type: Committee Inquiry
First published: 01/10/2019
- RP 01 SEC Group PDF 2 MB
- RP 02 Scottish Futures Trust PDF 1 MB
- RP 03 Federation of Master Builders (FMB) PDF 403 KB
- RP 04 Individual 1 PDF 1 MB
- RP 05 Scottish Government PDF 1 MB
- RP 06 Individual 2 PDF 633 KB
- RP 07 NHS Wales Shared Services Partnership PDF 402 KB
- Letter to the Minister for Economy, Transport and North Wales - 4 March 2020 PDF 422 KB
- Letter from the Minister for Economy, Transport and North Wales PDF 241 KB