Committee publication · Correspondence · 9 June 2026
Letter from the Minister for Small Business and Economic Transformation relating to the Commercial Payments Bill, 19 May 2026
From: Business and Trade Committee
Inquiry: Small business strategy
Summary
Minister Blair McDougall informs the Business and Trade Committee that the Commercial Payments Bill was introduced in the House of Lords on 19 May 2026. The Bill aims to tackle late payment practices costing the UK economy £11bn annually and closing 38 businesses daily. It imposes 60-day maximum payment terms, 8% above Bank of England base rate interest on late payments, and strengthens the Small Business Commissioner's enforcement powers.
Key findings
- Commercial Payments Bill introduced in House of Lords to address late payments costing UK economy an estimated £11bn per year and closing 38 businesses daily
- Bill imposes maximum payment terms of 60 days with strictly limited exemptions and mandates interest on late payments at 8% above Bank of England base rate
- Small Business Commissioner granted new powers to investigate larger businesses for poor payment practices, adjudicate disputes outside court, and issue financial penalties
- Bill prohibits deduction and withholding of retention payments under construction contracts, with further consultation on implementation timing
- Government claims this will be the most significant late payments legislation in 25 years and give the UK the strongest legal framework on late payments in the G7
Tone
SupportiveTopics
Key actors
Blair McDougall MP, Liam Byrne MP, Small Business Commissioner, Department for Business and Trade, House of Lords
Notable line
“… the most significant legislation to tackle late payments over 25 years and will give the UK the strongest legal framework on late payments in the G7.”
Key Quotes
“I am sure you can appreciate the scourge that late payment practices have on small and medium businesses, costing the UK economy an estimated £11bn per year and closing 38 UK businesses, every day.”
“This will be the most significant legislation to tackle late payments over 25 years and will give the UK the strongest legal framework on late payments in the G7.”
“Small businesses won't have to waste time chasing late payments increasing productivity, they will also be better placed to grow their businesses by investing in capital and people.”
Source · parliament.uk record ↗