PROPOSALS from the new business secretary, Sajid Javid, to ensure small firms are paid on time have been cautiously welcomed by the Federation of Master Builders (FMB).
Brian Berry, the chief executive of the FMB, said that the industry had been plagued by late payments for too long.
He added: “I am pleased that the new business secretary will be bringing forward legislation to tackle the problem in next week’s Queen’s Speech.
“Late payment by larger firms is a major barrier to small and micro firms forming part of the supply chain for public sector contracts – if we can solve the problem of late payment, we will also open up public sector construction to thousands of construction SMEs. As two-thirds of all construction apprentices are trained by micro-firms, this will have untold benefits for local jobs and growth.”
Mr Berry said that the previous Government made some “small steps” in the right direction in terms of late payment.
He added: “For example, a new duty to report on payment terms will be imposed on all large firms from April 2016, and we hope this will help improve the situation through increased transparency. However, there is much more to do.”
Mr Berry said Mr Javid is also considering widening the powers for representative bodies to act on behalf of their members to challenge unfair payment terms.
Mr Berry said: “We eagerly await further details on this, as it is often difficult for small firms to highlight poor payment terms directly, without biting off the hand that feeds.”