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Government launches consultation on late payment legislation

The Department for Business and Trade (DBT) has opened a public consultation on new legislative proposals aimed at tackling late, long, and disputed business-to-business (B2B) payments. The consultation runs until 23 October 2025 and invites input from businesses, trade bodies, and other stakeholders across the UK.

Late payments currently cost the UK economy an estimated £11 billion annually, affecting over 1.5 million businesses and contributing to the closure of 38 firms per day. The proposed measures are said to represent the most significant legislative action on late payments in over 25 years and are intended to strengthen the UK’s legal framework, surpassing those of other G7 nations.

Key actions already taken include requiring large companies to report payment performance in annual reports and launching a new Fair Payment Code, led by the Small Business Commissioner.

The consultation seeks views on a range of proposals, including measures specific to retention clauses in construction contracts. Responses can be submitted via an online survey.

Debbie Petford, BESA’s director of legal and a member of the Actuate UK Business Group, stressed the importance of this consultation: “This policy announcement and consultation confirms that the Government understands the need for reform for late payments and cash retentions and that the industry should address the necessary culture and legislative change.

“We want to encourage companies across the engineering services to take part and support solutions that ensure a future business environment in which they can thrive and not just survive.”

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