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Updated payment model sees end of Network Rail retentions

21 June 2018

Encouraging progress within the rail industry has been welcomed, following Network Rail's announcement it will enforce 28-day payment and cease the use of retention clauses in contracts.

Poor payment practices have been a particular topic of discussion following the demise of Carillion earlier this year, which received significant criticism for taking over 90 days to pay its suppliers.

The failed business also owed millions of pounds in retentions when it collapsed, forcing a number of its supply chain out of business and causing considerable hardship for others.

There has been considerable support for the Aldous Bill by both MPs and industry, which is aiming to implement measures to protect retention funds, so they are not lost when contractors go out of business.

The updated procurement policy of Network Rail is expected to see revised contract terms for thousands of SMEs providers.

These improvements are expected to be brought in in advance of its five-year funding period, running from 2019 to 2024, according to Construction Enquirer.

Network Rail described the move as the "next natural step" after it previously introduced a Fair Payment Charter in 2011.

Among the first rail contractors to support the latest procurement proposals are Colas Rail, VolkerRail, VolkerFitzpatrick and Amco.

Senior personnel from these companies have voiced their approval of the leadership shown by Network Rail to abolish retentions and fix payment terms at 28 days.

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