The proposal for a new law to tackle fair payment contained in the Scottish National Party’s manifesto has been welcomed by the Federation of Master Builders (FMB).

Director Gordon Nelson said the SNP’s proposal, announced by Scottish National Party leader Nicola Sturgeon yesterday, could help construction SMEs.

Amongst the commitments, the SNP said it will increase the minimum wage to £8.70 by 2020 and “back plans for an annual UK target of 100,000 affordable homes, and use additional capital investment to deliver a further expansion of housebuilding in Scotland”.

Gordon Nelson said: “The construction industry contributes more than £10 billion to Scotland’s economy and employs over 170,000 people, so the health of this industry is crucial to Scotland’s overall prosperity. 98 per cent of businesses in the Scottish construction sector are small and medium-sized enterprises (SMEs) and one of the greatest struggles these firms face is the unfair payment practices perpetuated by some clients and larger contractors. Placing prompt payment terms into law could help protect small businesses from predatory practices and also help encourage more of them to engage in public sector procurement.

“In terms of housing, most people know that we are not building anywhere near enough homes in Scotland and it’s good to see that the SNP manifesto recognises this. Their commitment to increasing capital investment in housing is welcome but if we are to achieve the level of house building required, barriers to SME house builders must be removed. If we carry on as we are, the under supply of new housing will pose a real threat to Scotland’s future social and economic well-being.”

Nelson added: “Finally, we welcome the SNP’s announcement of a more targeted approach to business taxation. However, we would like to have seen the SNP echo the commitment of the Green Party in pledging to cut VAT on housing renovation and repair to 5 per cent, a policy the SNP has previously shown support for. Research by Experian has demonstrated that a VAT cut from 20 per cent to 5 per cent could lead to 2,417 construction jobs in Scotland and an additional 2,000 jobs in the wider Scottish economy in 2015. This was a missed opportunity to back jobs and growth.”