The Commercial Payments Bill cleared the House of Lords yesterday, 20 October, and moves next to the House of Commons. For finishes and interiors contractors, it is the most important change to payment practice in more than 25 years.

The Bill bans cash retentions in construction contracts. The ban comes in over three years from commencement. After that point, every retention clause becomes void and any money still held must be paid out. The Bill also:

• caps payment terms at 30 days for public sector payers and 60 days for private sector payers
• makes statutory interest on late payment impossible to contract away
• gives the Small Business Commissioner new powers to investigate and penalise persistent late payers

The Bill passed through the Lords with the retentions policy intact. An amendment to exempt resident management companies from the ban was rejected at Report stage. It is likely to be tabled again in the Commons.

Around £4.5 billion of retention is held each year in England, and £229 million of it is lost every year when firms further up the chain become insolvent. Between £300 million and £600 million is held from the finishes and interiors sector alone. More than half of FIS members (52 per cent) report problems getting their retention back.

Iain McIlwee, Chief Executive of FIS, said:

“This Bill can change how money moves through construction, and we cannot afford to lose it now. Retention does not buy quality. It takes working capital away from the firms we rely on to train people and deliver safe buildings. The biggest risk in the Commons is delay. Exemptions and amendments that reopen settled ground could leave the Bill running out of time. Every MP needs to hear from the businesses this will affect.”

FIS is working with colleagues from across the industry [name partner organisations here, if confirmed] to make sure MPs understand what is at stake.

What FIS is asking for

FIS supports the Bill without qualification. Our asks are about making it work in practice:

• • no exemptions from the retentions ban for any client group
  • no substitutes for retention, such as fixed sums or staged payments tied to defects
  • a firm commencement date
  • a commitment to use the Bill’s new power to bring payment terms below 60 days
  • affordable, fast dispute resolution for low-value claims

Next Step: Contact your MP

Members can help by writing to their local MP now, before the Bill’s Commons stages begin. Use TheyWorkForYou to find your MP’s contact details. A short, personal message about how retention and late payment affect your own business carries far more weight than a template, but to help we have suggested text to adapt:

Dear [MP name],

I run [company], a [specialist finishes/interiors] business in [town] employing [number] people. The Commercial Payments Bill will soon reach the Commons, and I’m writing to ask for your support.

At the moment we have £[amount] held in retention across [number] projects. That is money we have already spent on labour and materials, and we could be investing it in apprentices and training. Retention does not improve quality, and when contractors further up the chain fail, it is often lost altogether.

Please support the Bill and resist any amendments that would add exemptions or delay. I’d welcome the chance to tell you more, or to show you our work.

Yours sincerely,
[Name]

Feel free to send the FIS Policy Position with the email.

A more detailed briefing which looks at a is available on request from info@thefis.org – this briefing adds a clause-by-clause analysis, the full evidence base and responses to common objections to support protecting the key parts of the Bill.

References:

• Commercial Payments Bill [HL] Stages – UK Parliament
• Lords completes examination of Commercial Payments Bill – UK Parliament

The Construction Industry Joint Council (CIJC) has agreed a staggered increase in holiday entitlement over the next two years.

From 1 January 2027, an additional half day will be introduced, taking the annual entitlement up to 23.5 days (plus eight bank holidays). Another half day will then be added from 1 January 2028, taking the total to 24 days. An updated Holiday Entitlement for 2027 will be made available to members in December.

The Construction Leadership Council has published practitioner guidance setting out the behavioural principles that should be applied when developing, reviewing and auditing fire risk assessments (FRA) and fire risk appraisals of external walls (FRAEW).

The advisory note provides information for those directly and indirectly impacted by the undertaking these assessments and appraisals. This includes, but is not limited to:

1. Authors
2. Reviewers
3. Auditors
4. Commissioning parties
5. Regulatory bodies
6. Lenders, valuers and other parties relying upon the outputs
7. Any identified stakeholder of the bodies listed above.

The guidance can be found here.

The British Standards Institution recently published a revised edition of the code of practice for FRAEW. PAS 9980: 2026 can be found here.

The Ministry of Housing, Communities and Local Government has also published FRAEW supporting guidance which aims to help non-technical users understand the appraisals of their external walls, what to consider when commissioning an FRAEW and how to interpret the report findings. The supporting guidance can be found here.