Draft Companies (Directors' Report) (Payment Reporting) Regulations 2025

Blair McDougall Excerpts

Tuesday 21st October 2025 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Blair McDougall)]

I beg to move,

That the Committee has considered the draft Companies (Directors’ Report) (Payment Reporting) Regulations 2025.

It is a pleasure to see you in the Chair, Ms Vaz. It is also a pleasure, as the new Minister for small business, that this is the first statutory instrument that I am speaking on, as someone who ran a small business and suffered from late payments at times.

Small businesses are the backbone of our economy, employing millions of people and enriching our lives, yet we know that the scourge of late payments has been holding them back. Late payments are estimated to cost the economy almost £11 billion per year and to lead to 14,000 businesses closures annually. That is an average of 38 businesses every single day. This cannot go on.

That is why this Government has already taken action to improve payment practices. In December 2024 we launched a new Fair Payment Code and introduced secondary legislation requiring construction businesses to publish reports on their retention payment practices. In July we launched a public consultation considering additional legislative measures to hold businesses to account on payment performance.

The consultation considers measures that go even further than today’s statutory instrument, and will be the most significant legislation to tackle late payments in over 25 years. It will give the UK the strongest legal framework on late payments in the G7. These measures will include removing flexibility around maximum payment times, which disproportionately impact small businesses, and introducing mandatory interest on late business- to-business payments. Our consultation closes on 23 October—Thursday this week—and we intend to take forward primary legislation as soon as parliamentary time allows.

Today we are making a down payment on those wider legislative reforms. We are going to build upon the existing payment transparency regulations for large companies by introducing payment data headlines into directors’ reports. Large companies are already under a duty to report biannually on their payment practices and performance. These draft regulations will require large companies to disclose payment reporting data within directors’ reports required under the Companies Act 2006, further increasing the transparency of payment performance to their boards, stakeholders and auditors.

Businesses that are already adhering to current payment regulations will not be significantly affected, as it is data large firms are already required to collect and publish through Gov.uk. The Government want to shift the focus from small businesses wasting hours of their time chasing late payments, and instead put the onus on the boards and stakeholders of large businesses to ensure they are paying their suppliers fairly.

I will now outline the key elements of this statutory instrument. These regulations amend schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and introduce the requirement for large businesses to report information about their payment practices within their directors’ reports. The payment data headlines will include statements on payment practices, average time to pay, and the percentage and sum of payments made before 30 days, between 31 and 60 days, and after 60 days. They will also include the sum and proportion of payments that were not paid within the agreed payment period.

This data will publicly illustrate a company’s approach to payment. It is only a small ask for large businesses, but will help with continuous improvement of payment times. The Government are committed to ensuring that this legislation continues to work and this instrument will be subject to a review within five years. I hope hon. Members on the Committee will see the benefits that these draft regulations provide and agree with the introduction of this affirmative statutory instrument.

--- Later in debate ---

[Blair McDougall]

I am grateful for the support across the House on these regulations. It is clear from hon. Members’ constructive comments that we all agree that this is a serious problem that we need to tackle.

To respond to some of the specific questions, the hon. Member for Grantham and Bourne made a powerful case with his statistics about the impact of late payments on the economy. In terms of the burden on business, we think it will be a very small one, in return for potentially a bigger prize—I think it is 133 million hours spent across the economy chasing late payments. To his point on consistency, there is some overlap between the data that people already have to report and the data that we are suggesting be put into the annual reports through these regulations.

On the question about the powers of the Small Business Commissioner, part of the consultation we are currently running is on proposals to give the commissioner more powers to investigate and resolve late payment cases. With these regulations as part of the wider package of measures, we will be delivering the biggest reform to late payment regulations in 25 years; as I say, this measure is very much a down payment on what is coming. I urge hon. Members present to look at the proposals and to take part in the late payments consultation over the next couple of days.

These regulations are just the first step, but they are potentially the start of making a huge difference to what is a huge problem for small businesses. I commend the regulations to the Committee.

Question put and agreed to.