Commercial Payments Bill Progress Update

The Commercial Payments Bill has taken another important step forward, completing its passage through the House of Lords and moving to the House of Commons on 21st October for further scrutiny.

Late payments place a significant burden on flooring contractors and other businesses, with the Government estimating that they cost the UK economy £11 billion each year. The Bill sets out to introduce a package of reforms to strengthen payment practices, including maximum payment terms of 60 days, mandatory statutory interest on late payments and stronger powers for the Small Business Commissioner to tackle poor payment practices. It also prohibits the deduction and withholding of retention sums under construction contracts.

Most measures will be brought into force following Royal Assent, allowing time for businesses to prepare and for the necessary secondary legislation to be developed.

Construction businesses will need to understand and prepare for the new requirements and consider how they apply across their contractual arrangements, including both construction contracts, as defined in the legislation, and other commercial contracts.

Information on the measures in the Bill, including a summary of the changes affecting construction contracts, is available here. The Construction Leadership Council plans to work with the Department for Business, Innovation, Science and Trade and a broad range of industry stakeholders to develop further guidance, helping businesses understand the reforms and prepare for their implementation.

Together, these reforms aim to help build a stronger payment culture, give businesses greater confidence that they will be paid fairly and on time, and support more resilient supply chains with the confidence to invest and grow.

Track the progress of the Bill for further updates: bills.parliament.uk/bills/4128