Late payments threaten construction jobs and housing targets

The Chartered Institute of Building (CIOB) has warned that chronic late payments in the construction industry are pushing small and medium-sized firms to the brink and could jeopardise the government’s housing and infrastructure targets.

Nearly 4,000 construction companies in England and Wales became insolvent in the 12 months to August 2025, according to official data — the highest figure of any UK industry. The CIOB says that cashflow problems caused by clients and main contractors delaying invoice payments are a major factor behind the rising number of failures.

In its response to a government consultation on late payment reform, the CIOB called for a hard cap on payment and dispute periods, financial penalties for persistent late payers, and mandatory transparency reporting to make companies accountable for their payment practices.

The issue is particularly damaging for small businesses. Paul Hayman, CEO of MA Group, said around half of his firm’s invoices are paid later than agreed 30-day terms — sometimes taking up to 240 days to settle.

“When we are paid late it directly affects cash flow, creates strain on supplier relationships, and increases our administrative overheads,” he said. “It’s such a common issue yet still so frustrating and disheartening.”

Stephen King, director at Rail Asset Development, described a recent case where his company completed work in March but was told it might not be paid until April 2026.

“That will be over a year since we provided the service,” he said. “It’s totally unacceptable, especially when we’re such a small firm.”

The CIOB says many smaller contractors are reluctant to speak out for fear of losing future work. Miruna Leitoiu, CIOB’s policy and public affairs officer, warned that without reform, “it is inevitable more construction companies will fold.”

“The industry is vital in delivering the 1.5 million new homes and major infrastructure projects the government has committed to,” she added. “But the rate of insolvencies we’re seeing is extremely worrying. Existing measures like the Fair Payment Code and Small Business Commissioner have had limited impact — we now need meaningful change.”

The CIOB is calling for the government to tighten enforcement, close loopholes, and ensure fair, prompt payments to protect jobs, maintain supply chains, and restore confidence across the construction sector.