1st August 2025

Industry

The Government has published a new Small Business Plan along with several important policy updates. These include changes to licensing regulations, support for digital adoption, improvements to the Business Growth Service, and increased funding through the British Business Bank. A key priority of the plan is tackling late payments, which cost the UK economy an estimated £11 billion annually and cause 38 business closures each day.

As part of this initiative, the Department for Business & Trade has opened a 12-week public consultation on proposed legislation designed to ensure suppliers are paid promptly. This specially impacts the built environment where issues such as retention clauses continue to impact cash flow and business sustainability.

Key Proposals Under Consultation:

  • Board-level accountability: Greater scrutiny of payment practices by company boards or audit committees.
  • 60-day maximum payment terms: Removal of the current exemption that allows companies to agree to longer terms.
  • 30-day invoice verification limit: Disputes must be raised within 30 days of invoicing.
  • Expanded powers for the Small Business Commissioner: Including the authority to investigate complaints, impose fines, and issue legally binding decisions.
  • Spot checks: To confirm accurate reporting of payment performance by large businesses.
  • Fines for persistent late payers.
  • Mandatory interest reporting: Companies must report the total statutory interest paid for late payments.
  • Construction-specific measures: Two options are proposed to address retention clauses:
    • Ban their use entirely in construction contracts, or
    • Introduce protections to ring-fence retention funds from insolvency or delayed payment risks.

The issue of retentions has long been a challenge across the built environment, with contractors frequently having a portion of payment withheld until project completion — often without guarantee of recovery. This consultation acknowledges the problem and invites stakeholders to provide input on how best to address it.

The NFDC recognises the significance of these proposals for the demolition industry and encourages all members to share their experience and respond to the consultation before it closes on 24 October 2025.

Originally published Aug 01, 2025 10:42:31 AM, updated August 1 2025.