The government’s plans for more stringent rules around prompt payment will go ahead in this parliament, following its announcement in the King’s Speech on Wednesday 13 May.

Elsewhere in the speech, the King outlined plans to reform regulation to encourage growth and build a closer relationship with the EU. Bills to speed up investigations by the Competition and Markets Authority and to streamline cross-border financial transactions were also included.

With the overall theme of the speech focusing on enhancing national security in areas such as energy, defence, policing and health, a Bill to improve cyber resilience was also introduced. 

“The government faces tough choices as it reels from last week’s local election results amid global uncertainty caused by the Iran war,” ICAEW Chief Executive Alan Vallance said. “Even with this planned legislation, top of the list must be prioritising measures to enable the economic growth the country needs.”

In April, ICAEW members said that the government should prioritise tax simplification, provide regulatory clarity on AI and update the skills framework.

“Our members tell us that doing business is too complicated, too expensive, and too uncertain,” said Vallance. “We hope the government will commit to reducing the burdens on business to drive economic growth and boost confidence.”

Action on late payments

The Small Business Protections (Late Payments) Bill will introduce maximum payment terms of 60 days and mandatory interest of 8% above Bank of England base rate on late payments. The Bill also includes measures that:

• Introduce a time limit for raising invoice disputes.
• Require boards or audit committees of large companies with a history of ‘persistent late payments’ to report on poor payment performance and intended actions to address it.
• Give the Small Business Commissioner powers to investigate businesses suspected of conducting poor payment practices and adjudicate disputes between businesses.
• Give the Small Business Commissioner the ability to fine persistent late paying businesses.
• Ban the practice of deducting and withholding retention payments under construction contracts.

“Late payments are damaging to the economy, threatening jobs and the survival of otherwise productive businesses,” Vallance said. “Time spent chasing payments is time that is not being used by businesses to win new work and grow, and this legislation will make a real difference to payment culture.”

Regulating for growth

Aiming to address issues of complexity and outdated elements within the UK’s current regulatory regime, the Regulating for Growth Bill will make growth a priority factor in decision making for regulators to encourage a less risk-averse approach, including reporting requirements to measure the impacts of these decisions.

More significantly, it will create “sandboxing powers” which will allow the relaxation of rules to allow businesses to test new products and technologies. The government hopes that this will encourage the development of emerging technologies, particularly in the government’s key sectors for growth.

Closer ties with the EU

The government has made no secret of its ambition to create closer ties with the EU, in particular when it comes to security and trading.

The European Partnership Bill provides the legal framework to implement agreements with the EU on areas such as food and drink, emissions trading and electricity. It also introduces the power to extend the Bill’s application to future treaties with the EU.

Enhancing financial services

Delivering critical elements of the 2025 Leeds Reforms, the Enhancing Financial Services Bill legislates for “modernised” consumer protections that better reflect digital banking. It includes measures to streamline the regulatory framework and bring the Payment Systems Regulator into the Financial Conduct Authority.

It also includes changes to regulation, including the Senior Managers and Certification Regime, aiming to reduce the regulatory burden by 50%. 

The framework underpinning the ringfencing of retail and investment banking will be updated as part of the Bill, with the aim to unlock more financing options for UK businesses.

Cyber security

The Cyber Security and Resilience Bill will expand existing regulations to include managed IT services and data services, among others, in the scope for cyber security reporting.

In scope organisations will have to report a wider range of cyber incidents to regulators and the National Cyber Security Centre within 24 hours, with a full report expected 72 hours later. 

Tougher, turnover-based penalties for significant breaches are introduced in the Bill. Meanwhile ministers will be given powers to instruct regulators to take steps to prevent cyber attacks in the event of a threat to national security.

Competition reform continues

Following 18 months of changes at the Competition Markets Authority (CMA) to speed up decisions and improve proportionality, the Competition Reform Bill will give the CMA Board a role in decision making for mergers and market investigations. Previously this would be led by an independent CMA Panel. The change will give the government more direct oversight of CMA decisions, with safeguards to maintain the CMA’s independence.

The Bill includes provisions to speed up market reviews, which typically take three or more years currently. Under the new framework, reviews would take 18 to 24 months.

CMA tests to assess whether a merger should be investigated will be clarified to provide clarity to businesses. The changes will also give more time for businesses to reach a solution with the CMA where an investigation might be triggered, to avoid the investigations process.