THE Building Engineering Services Association (BESA) has welcomed the Small Business Protection (Late Payment) Bill announced in this week’s King’s Speech.
BESA said late and retention payments had ‘undermined’ construction supply chains for years and continued to hold back quality and innovation across the industry.
The government said the bill would be ‘the most significant legislation to tackle late payments in over 25 years’ and provide the strongest legal framework on the issue in the G7. It will impose maximum payment terms of 60 days, enforce mandatory interest for late payments at 8% above base rate, and introduce a time limit for raising invoice disputes before payment is due.
The government has also pledged to take action to remove the practice of deducting and withholding retention payments in the construction sector.
“This is a historic day in our long battle against late payment and regressive practices in construction,” said BESA’s director of legal and commercial Debbie Petford. “There have been a series of voluntary codes of conduct and pledges from big businesses to mend their ways over the years, but we always felt that only proper, targeted legislation would really get to grips with the problem.
“Late payment and retention clauses in contracts lead directly to business failures, job losses and poor quality buildings that directly impact health, wellbeing and safety.”
She said it was now crucial that the government kept up the momentum and moved to a second reading of the bill so it can become law and start providing protection for firms struggling to cope with a series of challenges in the current economic environment.
Other provisions in the bill include forcing persistently late paying companies to publish details of their payment practices and intended actions to address them. It will also give the Small Business Commissioner powers to investigate and potentially fine businesses suspected of persistent poor payment and adjudicate disputes outside the court process.
“The government made this a key manifesto promise because of the regressive impact this has on employers all over the UK,” added Petford. “Late and unfair payment undermines business confidence and investment so this bill can play a significant role in driving economic growth.”
