As we embark on a new year, it’s only natural to look ahead to 2026 trends in construction. However, it’s also important to reflect on the year just gone.
2025 was a hugely significant year for the construction industry in regard to fair payments. With the built environment facing substantial challenges, not least the ongoing cost-of-living crisis, rising material costs and interest rates, and cashflow problems, subcontractor payments very much came into focus.
Consequently, key decision makers and industry leaders attempted to help the sector shine a spotlight on construction payments and progress claims and take some positive steps towards reforming the entire payment process.
Construction UK Fair Payment Code (FPC)
With the UK Fair Payment Code (FPC) launched towards the end of 2024 with the aim of increasing the importance of accurate and fast payments, it looked set to have a significant impact on the transparency of subcontractor payments in 2025 and beyond.
However, a July report by Simply Business revealed that 97% of small business owners hadn’t seen any reduction in late payments since the FPC was launched. With the Prompt Payment Code (the FPC’s predecessor) having very little trust across the industry, there had been hesitation among many to sign up to the FPC.
While offering various transparency and competency benefits, the FPC is entirely voluntary and requires additional time and resources to report on small payments – leading people to question as to why they should sign up to something that takes up even more of their precious time.
As a result, the FPC was the subject of a discussion at 2025’s Construction Wave CFO Summit in London in May between Rob Driscoll (Director of Legal & Business (General Counsel) & Association Secretary at the Electrical Contractors’ Association) and Christina Wilson (Finance Director of Construction Services at Sisk Group). This discussion, sponsored by Payapps, focused on the potential of the FPC but both participants raised concerns over the use of it in its current form, with Christina revealing very few companies that had previously signed up to the Prompt Payment Code – the FPC’s predecessor – had re-signed up to the Fair Payment Code.
Rob Driscoll also highlighted there is no silver bullet when it comes to prompt and fair payments and while the FPC was introduced to tackle the issue of lengthy payment terms and late payments, each contractor, subcontractor, quantity surveyor or SME owner will have different levels of risk appetite.
As a result, he suggested it’s important the industry identifies the right balance between risk appetite and quality.
New Small Business Commissioner – Emma Jones CBE
With late and fair payments an ongoing concern for the construction industry, a new Small Business Commissioner was appointed in June. Emma Jones CBE, founder of Enterprise Nation, took up the role with the aim of ensuring the UK’s small businesses are treated as fairly as possible by larger companies.
The Small Business Commissioner would also look to provide practical resources and advice to help small and medium business owners navigate commercial challenges and resolve payment disputes.
Having run her own business for many years, the new Small Business Commissioner will likely know the pressures of ensuring that a business remains financially stable throughout its life. It is therefore hoped Ms Jones, and the government, will utilise this experience to help tackle the problem of late payments across the construction industry.
Conflict avoidance and adjudication in construction
In June 2025, Payapps welcomed key decision makers and industry leaders to an event at the F1 Arcade in London to shine a spotlight on conflict avoidance and the issue of prompt and fair payments.
This engaging panel session entitled ‘From gridlock to green light: tackling rising adjudications and tips for conflict avoidance’ brought together:
- Ian McIlwee – CEO of Finishes and Interiors Sector – FIS
- Reiss Duthie – Commercial Director at Mitie and UK Adjudicator
- Rob Driscoll – Director of Legal and Business at Electrical Contractors’ Association (ECA) and former advisor to the Cabinet Office and Construction Leadership Council)
The thought-provoking discussion focused on the importance of avoiding conflict in construction following the revelation that construction firms are spending around 1.6% of turnover on legal fees, double that of the industry norm.
It also debated the attempts to improve payment transparency in construction through the introduction of the Fair Payment Code, with Rob suggesting that while the FPC was undoubtedly a positive step forward, there is still plenty of work to be done to make the initiative seem more appealing to contractors to increase sign-ups.
Building trust in construction subcontractor payments
Sadly, the cost-of-living crisis and financial difficulties across the built environment also saw the continuation of significant insolvencies in the construction industry. In fact, just under another 4,000 construction firms became insolvent between October 2024 and September 2025.
To help shine a spotlight on the worrying number of struggling construction firms, a webinar focused on the fit-out sector and entitled ‘From Conflict to Collaboration: Building Trust in Subcontractor Payments’, was held in September.
Attended by some leading names, including Payapps’ own Anthony Puma, the webinar illustrated how the sector needed to come together to increase transparency, use technology to smooth the payment process and – ultimately – promote fairer payments.
Government consultation tackling poor payment practices in construction
Towards the end of the year, between 31st July and 23rd October, the UK government held a consultation tackling poor payment practices in the construction industry, focusing on late payments and retention clauses. It consulted businesses, trade representative organisations and interested parties on ways that cashflow could be improved and how the number of late or disputed payments could be reduced.
The consultation formed part of the Small Business Strategy, which was launched at the end of July with the aim of making the most significant legislative reforms in more than two decades to help drive economic growth, support small businesses, reduce bankruptcies and boost productivity.
Consequently, it is hoped that resulting legislative action will empower Emma Jones, the new Small Business Commissioner, to reshape construction payment practices and wield stronger fines against bigger organisations and companies that consistently are late in their payments to suppliers.
If approved, the reforms will also set maximum payment terms to 60 days, with the aim of reducing this to 45 days. As a result, firms will be provided with the peace of mind of knowing they will receive payments on time – crucial with many companies trying to combat the ongoing cost-of-living crisis.
The government’s consultation also included proposals on the use of retention clauses in construction contracts, acknowledging retention payments can often be subject to late, partial or non-payment for the supply chain. Consequently, it suggested either the prohibition of the use of retentions or the introduction of requirements to protect retention funds deducted and withheld from insolvency and late or non-payment.
Payapps’ perspective
As the above suggests, it’s been a hugely significant year for the construction industry in regard to fair payments. As the industry leader in progress claims software, and with enhancing transparency and the payment process at its heart, Payapps is hopeful the developments over the past 12 months will help to reduce the number of insolvencies being seen across the built environment, and ensure a fairer and faster payment process for all.
We were delighted to have seen major award success on two separate occasions in 2025:
Payment Technology Award (Global Fintech Awards) – In October, Payapps was ‘Highly Commended’ in the prestigious Payment Technology Award category at the Global Fintech Awards. The award focused on payment solutions that improve speed, security and user satisfaction while adapting to trends and strong fraud prevention measures, so it was an honour to have been highly commended in such a competitive category.
‘Product of the Year’ Award (Construction Computing Awards 2025) – This award recognises the ‘most impressive technology impacting construction by improving efficiency, creativity and building methods’ and is testimony not only to the technology we have created, but the people behind it. In fact, the dedication of our wonderful team, along with the trust and support of our clients, are what made it possible.
2025 was a challenging year for the construction industry, but with the legislative reforms and focus on increasing transparency throughout the payment process, 2026 looks set to be a fairer and (hopefully) more prosperous year for all.
