The National Federation of Builders (NFB) says that yesterday’s decision by the Bank of England’s monetary policy committee to cut base interest rates will affect how late payments are calculated.
The Late Payment of Commercial Debts Regulations 2013 allows companies that are owed payments to charge interest at 8% of the debt plus the Bank of England base rate. If the Bank of England cuts interest rates, the amount of money that creditor businesses may claim will also fall.
NFB chief executive Richard Beresford said: “The construction industry has the worst payment record of any sector, with 31% of all late payment in the UK. Construction SMEs are owed more than £30bn in unpaid invoices.
“Although we understand the Bank of England’s decision takes a range of issues into account, we would ask the government to step up efforts to ensure late payment is tackled more aggressively throughout the construction industry. Avoiding paying subcontractors in the supply chain will not help attract new workers into the industry, especially at a time when we need to address the skills shortage, the housing crisis and convince the government that we can deliver on planned infrastructure.”