Included in a suite of proposed legislation to improve conditions for small and medium-sized businesses were “options to reform or ban cash retentions in construction contracts.”

The move was hailed by industry campaigners.

Rob Driscoll, ECA Director of Legal & Business, said: “Government’s engagement on how to reform retentions marks a seminal once-in-a-generation moment for the industry to come together and shape reform in an area which has stifled growth, innovation and training, crippling supply-chain cash-flow and amplifying the repercussions of insolvency for over a century.

“Let’s hope industry can come together, give clients the comfort they need and suppliers the protection they need, in order to make our industry more resilient to deliver the UK’s built environment.”

Civil Engineering Contractors Association spokesperson David Allen said: “CECA will also continue to campaign for the abolition of cash retentions in the construction sector, which lock up funds that could be put to better use.

“As an industry, if we get this right, we will unlock cashflow across our sector. In doing so we will support SMEs and specialist contractors, allow businesses to operate under more sustainable margins, and free them to deliver the vital infrastructure that businesses and communities rely upon every day.”