Concerns have been raised over the ability of construction firms to address late payment issues after the Bank of England cut base interest rates to a historic low.

With rates slashed from 0.5% to 0.25%, the National Federation of Builders (NFB) said the measure will affect the amount of money creditor businesses can claim from owed payments.

The Late Payment of Commercial Debts Regulations 2013 allows companies that are owed payments to charge interest at 8% of the debt plus the Bank of England base rate.

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However, the NFB said the construction industry makes up 31% of all late payment in the UK, while SMEs are owed over £30 billion in unpaid invoices.

Richard Beresford, Chief Executive of the organisation, said the Government must "step up efforts" to ensure late payment is tackled more aggressively throughout the sector.

He said: "Avoiding paying subcontractors in the supply chain will not help attract new workers into the industry, especially at a time when we need to address the skills shortage, the housing crisis and convince the Government that we can deliver on planned infrastructure."

(LM/CD)