The Bill sets out maximum 60-day payment terms, mandatory interest at 8% above the base rate for late invoices, and a defined window for raising disputes before payment is due. Ministers said the measures would give the UK “the strongest legal framework on late payments in the G7” and help tackle what they estimate to be an £11?billion annual drag on the economy. Government figures also show that late payment contributes to the closure of 38 small businesses every day.

Alongside the core reforms, the Bill includes a commitment to address the widespread use of retentions in construction, a practice that can erode margins for SMEs and subcontractors. Persistent late payers will be required to publish details of their payment performance and planned corrective actions, while the Small Business Commissioner will gain new powers to investigate, fine and adjudicate disputes outside the courts.

The Building Engineering Services Association (BESA) described the announcement as a “historic day” in the long-running fight against late and unfair payment.

Debbie Petford, BESA’s director of legal and commercial, said the Bill marked the culmination of decades of campaigning to remove practices that “lead directly to business failures, job losses and poor-quality buildings that impact health, wellbeing and safety”.

She added that voluntary codes had repeatedly failed to shift behaviour and urged the government to maintain momentum by moving swiftly to a second reading so the legislation can begin protecting firms facing sustained economic pressures.

Petford said the Bill’s wider provisions, including greater transparency for poor payers and enhanced enforcement powers, could play a meaningful role in restoring confidence and supporting investment across the construction supply chain.