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Construction: Billing

Question for Department for Business, Innovation and Skills

UIN 18211, tabled on 30 November 2015

To ask the Secretary of State for Business, Innovation and Skills, what recent support his Department has provided to building construction firms to ensure their bills are paid on time.

Answered on

4 December 2015

Late payment remains an important issue for small businesses in the UK. The Government is taking significant steps to assist small businesses to recover late payment debts.

Through the Enterprise Bill, currently before Parliament, we will legislate to establish a Small Business Commissioner to help small business resolve disputes with large companies, tackling, in particular, late payment. The Commissioner will act as a disincentive to unfavourable payment practices, and build the confidence and capabilities of small businesses to help them to assert themselves in contractual disputes and negotiate more effectively with larger businesses.

This is part of a package of measures to tackle late payment. We have also legislated for new transparency measures in the public and private sectors. This will allow full public scrutiny of payment performance.

We have also strengthened the Prompt Payment Code to ensure it is a recognised and demonstrated beacon of best practice, and we recently consulted on proposals to give representative bodies wider powers to challenge grossly unfair payment practices.

Government promotes fair payment practices in construction through legislation (the “Construction Act”), the use of public procurement (promoting prompt payment to Tier 3 and the use of Project Bank Accounts), and by working with the industry through voluntary measures (such as the Prompt Payment Code and the Construction Leadership Council’s Payment Charter).

The Payment Charter includes a commitment of zero retentions by 2025. To support this work, the Government recently announced a review of the practice of cash retentions under construction contracts.

Tackling late payment is about creating a responsible payment culture where larger companies recognise the benefit of having a sustainable and robust supply chain, and smaller businesses feel able to challenge poor behaviour. Once implemented, the Government is confident that these measures will lead to significant changes in the UK’s payment culture.

Answered by

Department for Business, Innovation and Skills