Bill would see government deliver promise to ban retentions

Ministers have today introduced legislation to crackdown on late payments.

The Commercial Payments Bill, which the government is dubbing its ‘Small Business Protections Bill’, introduces a clear duty on large firms to pay smaller suppliers on time. 

Under the legislation, stronger powers will be given to the Small Business Commissioner to investigate, adjudicate disputes and fine persistent late payers, with penalties potentially worth tens of millions of pounds. 

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Under the planned legislation on late payments, retentions in construction will be banned

There will also be a new 60-day cap on payment terms for large firms, mandatory interest on late payments and action to ban retentions in construction.

The mandatory interest will be set at 8% above the Bank of England base rate.

The government said that 38 businesses in the UK close daily because of late payments and claimed its new legislation would amount to the toughest late payments regime in the G7.

“Too many small business owners are spending hours chasing money they are owed and when payments don’t come through, the cost is personal,” said prime minister Keir Starmer.

“It’s about whether you can pay your staff, keep the lights on, or invest in your future.

“Today we’re changing that with the toughest action on late payments in a generation, so small businesses get paid on time and get the backing they need to grow, create jobs and serve their communities.”