In the construction industry, cash flow is king. Yet one persistent and unfair practice continues to drain liquidity from subcontractors and smaller firms – retentions.
The National Federation of Roofing Contractors (NFRC) has long campaigned to eliminate or at least reform retentions, and now the Government has launched a major consultation on both late payments and retentions. This is a crucial moment in which the sector can have its say and potentially influence legislative changes. For more information, take a look at this week’s blog.
What’s happening?
In July this year, the NFRC welcomed the Government’s new Small Business Plan, particularly the launch of this consultation as a landmark chance to address retention abuse across the industry.
Key proposals under consideration include:
- A legally enforceable maximum on payment terms
- Mandatory interest on late payments
- Fines for persistent late payers
- Enhanced powers for the Small Business Commissioner
- In some sectors (especially roofing and cladding where better protections are already in place), complete abolition of retention clauses
- For other sectors, proposals to require Project Bank Accounts (PBAs) or adjusted trust accounts as protections instead of retentions
It’s estimated that over £300 million is currently locked up in retentions within the roofing and cladding sectors alone, and many firms report that chasing retentions is sometimes not worth the cost. The scale of the problem is clear: 80% of firms responding in the NFRC’s recent “State of the Industry” survey said retentions affect their business.
In light of past collapses of some major contractors like Carillion and ISG, many subcontractors have lost retention payments entirely. This consultation now gives the sector a chance to demand change.
How you can participate
The consultation is open until 23rd October 2025 across the UK. To help guide responses, the NFRC has published a Late Payment and Retentions Consultation Response Guide, which you can download HERE.
This guide provides templates and suggested answers, including a short response (taking around 5 minutes) and longer responses (taking approximately 10 – 15 minutes). There are also options to support either the complete abolition of retentions or improved protections.
While anyone in the industry is able to submit a response, it is advisable that the submission comes from a senior person in an organisation, such as a Managing Director or CFO. The weight and standing of a senior voice lend credibility and signal that your business is serious about reform across the sector.
What happens next
Once the consultation closes on 23rd October, the Government will review responses and likely propose legislative changes. If the volume and strength of industry feedback is high, there is a good chance of meaningful reform. This could include:
- Elimination of retentions in certain sectors
- Mandated use of PBAs or trust accounts
- Stricter payment schedules and penalties on late payers
- Reduced cash flow stress and lower risk from insolvencies
- More streamlined administrative burden around chasing retentions
Your voice counts
If retentions have ever had a negative impact on your business (perhaps affecting which jobs you take on or delaying investment in projects due to funds being tied up), your experience matters. As the NFRC points out, while it will take you only minutes to respond, your voice could change the industry for decades.
Access the consultation survey HERE and remember to respond before 23rd October.
What do you think the industry should be asking for in relation to this issue? Let us know in the comments over on our Facebook or LinkedIn pages.
06.10.2025
Feature image: Freepik
