Proposals by business secretary Sajid Javid to combat late payments to small firms have been given a cautious welcome by the Federation of Master Builders (FMB).

Brian Berry, chief executive of the FMB, said: “Late payment has plagued the construction industry for far too long and I am therefore pleased that the new business secretary will be bringing forward legislation to tackle the problem in the Queen’s Speech.

“Late payment by larger firms is a major barrier to small and micro firms forming part of the supply chain for public sector contracts. If we can solve the problem of late payment, we will also open up public sector construction to thousands of construction SMEs.

“As two-thirds of all construction apprentices are trained by micro-firms, this will have untold benefits for local jobs and growth.”

Mr Berry said: “The last government made some small steps in the right direction in terms of late payment – for example, a new duty to report on payment terms will be imposed on all large firms from April, 2016, and we hope this will help improve the situation through increased transparency. However, there is much more to do.”

Mr Berry said research by the FMB and National Specialist Contractor Council at the end of last year showed that more than 90% of small construction firms agree contractual payment terms with their clients of 45 days or fewer – but only 57% of members actually receive payment within those terms.”

Mr Berry said Mr Javid had also touted the idea of widening the powers for representative bodies to act on behalf of their members to challenge grossly unfair payment terms.

Said Mr Berry: “We eagerly await further details on this as it is often difficult for small firms to highlight poor payment terms directly without biting off the hand that feeds. This is partly why the problem has raged on for so many years.”