NFRC Welcomes Landmark Late Payment Proposals

THE NFRC (National Federation of Roofing Contractors) has welcomed the launch of the Government’s new Small Business Plan.

It says the new measures are “a significant step that shows real intent to support construction SMEs.”

Part of the plans is addressing the practice of cash retentions, which NFRC has long campaigned to abolish.

“This is a critical opportunity to end the unfair practice of retention once and for all,” said James Talman, NFRC Group CEO. “Our members consistently report this as one of their greatest business challenges, and it’s encouraging to see the Government finally taking action.”

Late Payment Proposals

The scale of the problem in the roofing industry is revealed by 80% of members responding to NFRC’s latest State of the Industry survey saying retentions affect their business.

• NFRC estimates over £300 million is currently locked up in retentions across roofing and cladding.
• Following the collapses of Carillion and ISG, many subcontractors not only lost active jobs but never recovered retention payments. One NFRC member who lost £127,000 asked: “How has the supply chain been let down so badly?”

A 2017 Pye Tait report estimated £6 billion is held in retentions across the UK construction industry at any one time, with £229 million lost annually to insolvency, a figure likely higher today. And it’s not just the private sector: in 2023, 86% of NFRC Members faced difficulties recovering retentions from local authorities.

Time for a Full Rethink

NFRC believes it’s time for a full rethink. While acknowledging quality is essential, retentions are no longer fit for purpose, it says. Futhermore, the trade association adds that alternatives which do not contribute to unnecessary insolvencies already exist. In roofing, long-term manufacturer and workmanship-backed guarantees, robust accreditation, and skilled training schemes offer stronger, more proactive safeguards.

NFRC is calling for a complete abolition of retentions in sectors like roofing and cladding where better protections are already in place. For others, it says government must mandate Project Bank Accounts (PBAs) or adjusted trust accounts, and successful models are already proven overseas.

NFRC also welcomes other proposed reforms in the consultation, including:

• Legally enforceable maximum payment terms
• Mandatory interest on late payments
• Fines for persistent late payers
• Enhanced powers for the Small Business Commissioner

NFRC is urging all roofing and cladding firms to respond to the consultation.

“If you’ve ever written off a retention because chasing it cost more than it was worth, turned down a job because 5% couldn’t be spared, or cut staff or training due to cashflow issues, your experience matters. It takes minutes to respond, but could change the industry for decades,” said Talman.

NFRC will be engaging its membership to ensure they understand the consultation’s proposals and have the chance to have their say.

Make your response before 23 October here.

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