As the Commercial Payments Bill makes its final stand in the House of Lords, FIS looks at progress and what we all need to do next to ensure that we get the reform we’ve been promised and how you can help.
Quick recap on what the Commercial Payments Bill is and how it is progressing?
The Commercial Payments Bill is the government’s plan to fix late payment in construction. The Bill will set in law a legal cap on payment periods, that statutory interest must be paid and can’t be contracted away, and, the headline measure for our sector, phases out cash retentions altogether.
So far the good news from our perspective is that the Bill has rifled through Committee stages in the House of Lords with any opposition swept to one side. The only significant change tightens the Bill by closing off a gap where public clients weren’t held to the same standard as private ones. There were also modest tweaks to widen the Small Business Commissioner’s cost-recovery powers (again a good thing) and add a duty to consult before setting financial penalty rules. Vitally what hasn’t been watered down is that the retention ban itself, and its phase-out timetable, has been supported this far.
Quick recap on what the Commercial Payments Bill is and how it is progressing?
The Bill has its final Lords hearing next week. Assuming it clears that stage as expected, it moves to the Commons, likely in Q4 this year (hopefully October). The Bill will then be subject to three debates in the House of Commons and at the end, if passed (Royal Assent and commencement), it becomes an Act – the Law!
Our hope is now that we can champion it through the Commons so that it becomes an Act within this Parliamentary cycle. Every amendment that reopens settled ground or adds complexity increases the risk of “ping-pong” (the Bill bouncing back and forth between the Commons and the Lords) which eats up the parliamentary time the Bill needs to actually pass. The single biggest risk to this reform right now isn’t opposition to its aims; it’s delay.
What we’re asking members to do
With the Bill heading to the Commons, it would be great for you to approach your MP and explain why this Bill is so important to construction. We’ve prepared a briefing note to help with this, which goes into the detail, but our advice is keep it simple. The priorities are:
- Back the Bill. Poor payment and retention abuse have been a cancer at the core of construction and drive adversarial relationships, undermine investment and destroy businesses and lives.
- Retentions don’t buy quality – competence, supervision and proper contracts do. Holding back cash doesn’t make anyone build better.
- Resist carve-outs that dilute the retention abolition. One exemption invites others, and SMEs end up carrying the risk.
- Close the loopholes. Staged payments and third-party arrangements are still lawful, be alert to any mechanism that quietly reintroduces a retention-by-another-name is caught.
- Hold the line on payment terms and interest. 30/60 days should be a floor, not a ceiling, applied at every tier and the Act needs to ensure interest reaches suppliers, not just exist on paper.
- Adjudication Reform is needed. Fast, affordable dispute resolution is critical and needs to be supported alongside the Act.
- Protect the timetable. Ask for a firm commencement date, not more consultation — and make sure the Commissioner is properly resourced (helped by the Bill’s own cost-recovery powers).
- Push for public sector leadership now. Nothing stops public clients dropping retentions today, the Construction Playbook could get ahead of the legislation and we’ve included a draft Retention Pledge in attached.
- Ensure the market is equipped to monitor impact. Watching how the Construction Act changes and their guidance get implemented, so they aren’t quietly reinterpreted or gamed to preserve the old way of doing things.
The ambition of this Bill is a construction sector that pays fairly by default. That only happens if we stay engaged through Commons stages and well past Royal Assent.
How we can help
If you need help contacting your MP, reach out to FIS and we can support the process and if you do get an opportunity to discuss are more than happy to go through this briefing note with you and help you prepare, but the truth is that what they will really want to do is hear your story and why this is important to you. The facts and figures help strengthen the case, but your story as their constituent is the critical part in getting them interested.
FIS Briefing Note available to download here.