The Government has launched a consultation on strengthening late payment legislation as part of its Small Business Plan. Build UK is developing a response and will be holding an online (Zoom) meeting on Tuesday 30 September 2025 from 9:00am – 10:30am.
Thanks to all those of you who have confirmed your attendance at the meeting to discuss the Late Payments Consultation.
If you have not yet received a calendar invitation with the Zoom details and are planning to join the meeting, please email [email protected] as soon as possible.
Based on feedback to date, Build UK have set out below some initial points to help inform the discussion at the meeting. Full details of the proposed measures can be found in the consultation document.
- Requiring audit committees to make recommendations on payment performance to company directors before results are published
- Build UK’s benchmarking of payment performance in the construction sector has already significantly raised awareness within company leadership of the need for prompt payment, and we are yet to see the impact of the new requirement for payment information to be included in Directors’ reports from 1 January 2026.
- Introducing maximum payment terms of 60 days
- The maximum payment term is already 60 days unless considered not ‘grossly unfair’ to the supplier, and most Build UK members that are required to report on payment performance have maximum terms of 60 days or less.
- Introducing a deadline of 30 days for disputing an invoice after receipt
- The Construction Act already sets out a specific payment framework for construction contracts and as such this proposal is likely to be incompatible with the Act.
- Making it mandatory to pay interest of 8% above the Bank of England base rate on late invoices
- Whilst a fixed statutory interest rate of 8% above the Bank of England base rate would be fair, it is unclear how making the payment of interest mandatory would work in practice and how it would be enforced.
- Requiring large businesses to report on the payment of statutory interest
- Large companies are reporting on an increasing number of metrics under the Reporting on Payment Practices and Performance Regulations and evidence of late payment is reflected in the existing metrics. As such, it is uncertain whether reporting on statutory interest would provide further transparency for the supply chain.
- Giving the Small Business Commissioner powers to impose financial penalties on large businesses that consistently pay late
- Build UK supports the principle of monitoring and enforcing the Reporting on Payment Practices and Performance Regulations. If financial penalties are to be applied, consideration should be given to what would be the most appropriate way of determining poor payment performance. Currently 25% of the 130 companies listed in the Build UK payment table would be liable for a penalty based on the definition of paying 25% of invoices late.
- Introducing additional powers for the Small Business Commissioner
- As construction disputes are out of scope of the Small Business Commissioner (SBC), we understand that the power to provide legally binding arbitration would not apply to construction disputes. Any additional powers given to the SBC should provide further transparency for the supply chain.
- Either prohibiting the use of retentions or introducing requirements for retentions to be protected in a separate bank account or through a guarantee
- The use of retentions impacts members across the supply chain and Build UK has previously supported legislative action being taken. We understand that there continue to be differing views on the way forward and a more detailed roadmap may be required.
- Changing the Reporting on Payment Practices and Performance Regulations so that large businesses are required to report once, rather than twice, a year
- Based on our experience to date, we are concerned that annual reporting would neither provide suppliers with up-to-date information nor result in large companies driving progress in performance.