King’s Speech 2026 including a welcome Late Payments Bill still leaves contractors short

I can see why the Office of the Small Business Commissioner (SBC) and other late payment critics are chalking it up as a win.

And looking back over my nearly three decades of experience chasing down unpaid contractor invoices, I agree that it’s a victory — of sorts, writes credit control and debt recovery specialist Adam Home, managing director of Safe Collections.

How long has a late payment crackdown been on the to-do list?

I’m referring, of course, to the welcome fact that after those same three decades (and longer) of being kicked into the long grass, UK government action to tackle late payments to small companies has finally made it onto the nation’s legislative agenda.

It was the King’s Speech on May 13th 2026 that confirmed the new late payment bill, representing this overdue but nonetheless historical turning of the corner.

What did the King’s Speech 2026 say about late payment?

Two brief lines from King Charles III confirmed the tabling of The Small Business Protections (Late Payments) Bill during the current session of Parliament.

The first — “My Government will also support the economic security of British businesses.” Followed by, “Legislation will be introduced to tackle late payments”.

When did the UK last legislate against late payments?

It’s not much to go on, considering it’s nearly 30 years since the government last saw fit to legislate against late payments (in the shape of the Late Payment of Commercial Debts [Interest] Act 1998.

But the King’s Speech isn’t meant for detail.

Yet in the case of this late payment bill — paradoxically — the detail is everything.

What has the government said about the late payments bill?

It’s one thing to promise to legislate to tackle late payments. And it’s even another thing to make claims that you are introducing “the toughest late payment regime in the G7,” as the government’s PR machine churned out in March 2026.

But the real question about the late payments bill that contractors and small business owners should be asking is:

Will the late payment bill’s measures actually stop my clients from paying late?

And another key question for companies to ask is, ‘Will the measures give my business the security around cash flow that we need?’

What King Charles was nodding to in his House of Lords speech was The Small Business Protections (Late Payments) Bill.

What are three key points of The Small Business Protections (Late Payments) Bill?

Three key points of the bill are:

• A new 60-day maximum term on payments from large businesses to SMEs (Small and Medium-sized Enterprises)
• Mandatory 8% statutory interest on late payments
• Expanded powers for the Office of the Small Business Commissioner (SBC) to “investigate, adjudicate disputes and fine persistent late payers with potential penalties worth tens of millions.”

These three measures may well add up to ‘the toughest late payment regime in the G7.’ But there are some worrying signs of the measures being watered down (when compared to how the measures were originally tabled by officialdom).

There are also some gaps in this anti-late payment strategy that raise questions — assuming the government truly wants to eradicate this age-old scourge.

Let’s take each area in turn.

Will the 60-day cap solve late payments?

There are two key issues with the 60-day payment cap.

First, why so long?

Having to wait about two months from the delivery of services or goods, or from the issuing of an invoice to receiving payment, sets such a low bar. At the same time, it’s high enough as a number of days to wait to cause plenty of small and contractor companies plenty of cash flow issues. The maximum payment term allowed in the public sector is 30 days. Why doesn’t the government align the private sector with that?

Is it only big companies that pay small companies late?

The second problem with the 60-day cap is targeting. Why is it only set to address late payments by large businesses to small businesses?

It’s become something of a pervasive myth in the UK that late payments are a ‘big-company-ripping-off-a-little-company’ issue. That perception has clearly influenced the draft of the Small Business Protections (Late Payments) bill.

It simply isn’t true that big companies are the only late payers.

We can tell you from our extensive experience of retrieving monies owed to contractors that SMEs failing to pay SMEs on time is just as much of an endemic part of the UK’s late payment culture. And the new late payments bill proposes nothing to tackle that, meaning many of the out-of-pocket will still be left short.

What does mandatory statutory interest of 8% on late payments actually mean?

The mandatory interest measure is a minor technical twist that most contractors are unlikely to notice, even though it is welcome.

The 8% statutory interest figure, plus whatever the Bank of England (BoE) base rate of interest is at the time, has been the standard model for how to charge late payment interest as a limited company since the last late payment legislation was passed in the UK in 1998.

But the 1998 framework originally allowed companies to negotiate and set their own clauses governing late payment penalties, invariably with lower interest rates.

What are the 1998 late payment legislation’s ‘overall remedy’ and ‘substantial remedy’?

Under that statute, companies could agree to different terms provided that “the overall remedy” included in the contract constituted “a substantial remedy” to late payment.

However, this open-ended, woolly wording left the door open for some companies to seek to limit or entirely negate their exposure to statutory late payment penalties.

The Small Business Protections (Late Payments) Bill appears to remove that option entirely, and it makes the standard 8% rate universal across the board in all contracts.

This represents a positive part of the bill, because now contractors can’t be forced to agree to lower late payment interest rates. 

What are the Small Business Commissioner’s new expanded powers?

My deepest concern about the late payments bill relates to the expanded powers for the Office of the Small Business Commissioner. There’s simply a lack of detail here about these expanded powers for the SBC (which, broadly, are ‘Adjudication,’ ‘Investigation’ and ‘Penalisation’).

Not only that, but when the late payment measures were first put forward by the government (in Q1 2026), the messaging was heavy on the threat of penalties ‘worth tens of millions of pounds’ to persistent late payment offenders.

To my reading, the current Small Business Protections (Late Payments) Bill is much quieter on that front, talking now of merely “potential penalties”.

We all know how things go between bills being tabled and what actually gets approved as law! Indeed, there are already reports of ministers having to push back on apparent lobbying from certain quarters looking to soften the provisions of the late payments bill.

Is the Office of the Small Business Commissioner up to the task?

Another concerning issue underpinning the new late payments bill is that the SBC is only a small office that employs 12 people. Pit that against the estimated 266 businesses closing in the UK every week as a direct result of issues stemming from late payments.

How is an office of that small size meant to get a grip on a problem so pervasive and so big? 

It’s not realistic for the Small Business Commissioner’s office to investigate every case, identify repeat offenders, and consistently build watertight cases strong enough to pass the enforcement threshold.

What expanded powers does the Small Business Commissioner need?

Without major investment to expand the SBC’s office, its resources, and its purview to include repeat offenders of all business sizes, the threat of penalties feels like a fading gesture.

In reality, most serial late payers — the worst offenders — will never be investigated by the Office of the Small Business Commissioner due to the fact that they are not a “large” company. And even when they are probed, and the enforcement threshold is found to have been breached, how will penalties be made to stick?  Through the courts? With how overburdened the civil court system is in 2026/27, contractors would need incredibly good luck to get their claim for non-payment of invoices (let alone a claim to enforce the right to recover statutory interest) heard any time in 2027.

The takeaway

I think it’s somewhat fair to assert what the Office of the Small Business Commissioner said in reaction to the King’s Speech 2026 — notably that, “The wind is in our sails when it comes to getting late payment sorted.”

However, there are a few gaping holes in the masthead.

In short:

• 60-day terms are overly long, still damaging to small companies, and meaningless if there is no enforceable sanction for paying later than 60 days.
• The Office of the SBC continues to be powerless (proportionately) to adequately deal with the endemic issue of SME-to-SME late payment, as the SBC can only deal with late payments from large corporations to SMEs. 
• On the eve of H2 2026, the civil courts are continuing to suffer as a late payment resolution route due to increasing fees, fewer court sitting days and longer waits. Therefore, the outlook for the vast majority of prompt paying companies is still stormy, even if the ‘wind is arguably more in the sails of getting late payment sorted’ than it has been in the UK for the last 30 years.