Kyle vows no climbdown on late payment crackdown as landmark bill enters parliament

"The legislation, billed by Whitehall as the most far-reaching shake-up of commercial payment rules in more than 25 years, caps payment terms at 60 days for large firms paying smaller suppliers, imposes mandatory interest of 8 per cent above the Bank of England base rate on overdue invoices, and hands the Small Business Commissioner sweeping new powers to investigate, name and fine serial offenders. It also outlaws the controversial use of "retentions" in the construction sector, a practice in which main contractors withhold a portion of a supplier's bill, ostensibly as a defects guarantee, but which the government argues has long been abused to prop up cashflow further up the chain."

"Kyle was unequivocal when asked whether ministers would soften the bill in the face of pressure from corporate Britain. "I am fighting to bring more fairness to our economy," he told Business Matters. "Sixty days is a solid, reasonable outer limit for paying a small business." He claimed the reforms would give the UK "the strongest legal framework in the G7" on commercial payments - a point ministers have made repeatedly since the package was first trailed earlier this year."

"According to government figures, poor payment practices drain roughly £11 billion a year from the UK economy and contribute to the closure of an estimated 38 small businesses every day."

The government is introducing the Small Business Protections (Late Payments) Bill to strengthen payment rules for large firms and protect smaller suppliers. Payment terms for large businesses paying smaller suppliers will be capped at 60 days. Overdue invoices will trigger mandatory interest set at 8% above the Bank of England base rate. A Small Business Commissioner will gain powers to investigate, name, and fine repeat offenders. The bill also bans the use of retentions in the construction sector, where contractors withhold parts of supplier payments under the claim of defects guarantees. The government links poor payment practices to major economic losses and frequent small business closures.

Read at Business Matters