Small Business Protections Bill introduced to Parliament today aims to create the toughest late payment regime in the G7.
The government says new legislation being put before Parliament will support millions of sole traders, freelancers and family firms across the UK by introducing strong new measures to tackle late payments.
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The measures include placing a clear statutory duty on large firms to pay smaller suppliers on time. That will provide certainty to small businesses which will help them invest and grow, supporting jobs and their communities.
According to government figures, as many as 38 businesses a day close because of cashflow problems due to not being paid on time. The
If passed by Parliament, the new legislation would introduce a 60-day cap on payment terms for large firms, as well as mandatory interest on late payments set at 8% above the Bank of England base rate. It would also ban the practice of withholding retention payments under construction contracts.
In addition, the Small Business Commissioner would be granted new powers to investigate, adjudicate disputes and fine persistent late payers, with penalties of as much of tens of millions of pounds. That will bolster work already being done: in the past year, the Office of the Small Business Commissioner has recovered more money for small firms than in the previous four years combined.
Prime Minister Sir Keir Starmer says: ‘Small businesses are the backbone of our economy – run by people who take risks, create jobs and keep communities going. This government is firmly on their side. Too many small business owners are spending hours chasing money they are owed and when payments don’t come through, the cost is personal. 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.’
Peter Kyle MP, Secretary of State for Business and Trade and President of the Board of Trade, adds: ‘Costing the UK economy £11bn every single year, late payments choke growth, cost jobs, and force too many good businesses to close. That ends today. Through this landmark bill we are delivering the toughest payment reforms in over a generation, to give the UK the strongest legal framework in the G7, and back small businesses with the certainty they need to grow and thrive.’
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