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Labour Peer introduces new payment bill

In a move to deal with payment abuse following the Carillion collapse two years ago, Labour peer Lord Mendelsohn is introducing a new payment Bill.

Lord Mendelsohn has taken up representations from leading construction body, the Specialist Engineering Contractors’ (SEC) Group and others, to improve payment security for SMEs.

The Bill incorporates the following measures:

  • a statutory limit of 30 days in which all firms will be required to discharge due payments;
  • given the crippling costs of adjudication, small firms in construction will be able to refer payment disputes to the Small Business Commissioner;
  • the remit of the Small Business Commissioner will be expanded to confirm that it includes construction and the Commissioner will have powers to impose penalties on large companies which are serial late payers, provide false payment performance data and fail to provide requested information as part of investigations.
  • accrued interest on late payments will be automatically included in due payments (without the need to separately claim it);
  • certain unfair payment practices will be outlawed such as sub-contractors having to pay fees to get on main contractors’ preferred lists of suppliers and payment of fees to get paid earlier under supply chain finance schemes;
  • the Bill amends the Public Contracts Regulations 2015 to mandate the use of project bank accounts for public sector works over £½ million.

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