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New Late Payment Rules Proposed

A new bill is set to be introduced to the House of Lords today clamping down on late payments.

Lord Mendelson, a Labour peer, will be giving the private member’s bill its first reading later this afternoon. The new bill proposes a statutory limit of 30-days payment for all invoices, along with banning clients from charging suppliers a fee for prompt payment.

It could also ban businesses being charged to appear on ‘preferred’ supplier lists. This will give the Small Business Commissioner the power to fine the worst offenders within the construction industry.

According to Lord Mendelsohn, the new laws are required due to lacklustre initiatives for tackling late payments to date.

“The recent huge escalation in outstanding payments shows that decades of promoting ‘culture change’ has only made things worse,” he said. “This bill will tackle the issue once and for all with a package of measures that is operable, impactful and measurable.”

It is thought that the bill was put together by a cross-party group of MPs and peers before Christmas, and amongst those there was Labour MP Debbie Abrahams who introduced a bill proposing project bank accounts to be used for all public sector contracts which was introduced last January.

Chief Executive of the SEC Group, Rudi Klein, worked alongside Lord Mendelsohn to develop the bill after 2019’s “insolvency crisis”: “The government’s manifesto for the recent election made clear that it would ‘clamp down’ on late payment… But since Carillion’s collapse, all we have had are numerous consultation documents.”

After the bill has been introduced it will be down to the government whips’ office to decide when a second reading could take place, and at this point the bill would be debated. For the latest updates and construction news, find out more on our news feed here.