The Commercial Payments Bill enters its final House of Lords reading, moving the UK construction industry closer to a complete ban on retentions.
Legislation aimed at outlawing cash retentions in the UK construction industry is reaching a critical milestone as the Commercial Payments Bill heads to its final stage in the House of Lords on 20 October. The bill seeks to end the long-standing industry practice where main contractors withhold a percentage of payment from sub-contractors until project completion or defect liability periods expire.
For decades, retention withholdings have restricted cash flow for sub-contractors and trade specialists across the sector. In worst-case scenarios, main contractor insolvencies have resulted in sub-contractors losing millions in withheld funds for work already completed. Pushing the bill through the final stages in the Lords represents a significant move toward reforming trade payment practices and protecting small business liquidity.
What does this mean for a UK tradesperson or DIYer actually buying this kit — does it change what they should pay, buy, or watch out for?
While this legislative shift will not immediately alter the shelf price of power tools or building supplies at trade counters like Toolstation or Wickes, it directly impacts cash flow for self-employed sub-contractors, electricians, plumbers, and joiners working under commercial contracts. The elimination of retentions means sub-contractors will retain their full earned margin upon completion, eliminating the need to self-finance withheld funds. This improved cash flow reduces the risk of working-capital shortages when purchasing bulk building materials, upgrading high-value cordless tool kits, or managing day-to-day business overheads.
If the bill successfully clears the Lords, it will represent one of the most substantial regulatory overhauls of construction payment terms in years. Sub-contractors should monitor the progress of the legislation to ensure their future commercial agreements align with upcoming statutory payment requirements.
Reported by ScaffMag — original article
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