Following over a decade of ECA’s (Electrical Contractors’ Association) influence and input, today the UK Government commits to the strongest comprehensive set of reforms to UK payment in over a century.

The reforms are designed to fix problems which cost the UK £11 billion a year, and will ease costs for SMEs through correcting late payment. These measures are the first package of significant changes in 25 years. The package reflects solutions devised by ECA in conjunction with the Cabinet Office and the Department for Business and Trade for over a decade.

ECA and its Members were joined by Unite the Union in October, calling on Government for reform of late payments

ECA welcomes today’s announcement of reforms which cover:
The Small Business Commissioner being given the enforcement powers to fine large firms who don’t pay, report or comply on time.
Removing the ability of large payers of small payees to contract out of a mandatory 60-day cap on payment terms.
Removing the ability to contract out of the statutory charge of 8% interest on late payment.
Boards or audit committees of persistently late-paying large companies will be required to publish explanations for poor payment performance and the actions they are taking to address it.
Banning retention clauses – for decades ECA led reform in this area with countless consistent campaigns. We look forward to ensuring the ban on retentions is created and shaped to be as robust and comprehensive as possible.
ECA also hopes that the following measures will not be lost:
A ‘put up or shut up’ period to dispute payments is implemented, and
Report on how much interest late payment is owed as both a value and a percentage.
Rob Driscoll, Director of Legal & Policy at ECA, said:

“These announcements represent a shift in the way Government views supply chain SMEs. The strength of the supply chain is as strong as its weakest link. These measures will supercharge the supply chain.

“Industry must come together and work to ensure there can be no back-door loopholes to get round the ban on retentions.

“We also hope that the measures for a ‘put up or shut up’ period to dispute payments is implemented, and report on how much interest late payment is owed as both a value and a percentage, will not be lost.”

Government has also launched the Business Growth Service and increased access to finance for SMEs and entrepreneurs with a massive £4 billion finance boost.

Rob Driscoll added:
“Government is really showing strength and investment in an SME growth agenda, a much-needed boost as our industry bounces into yet another economic uncertainty due to global conflict.”