Demands for Carillion’s small suppliers to be protected are growing as the full impact of the construction and PFI giant’s collapse hits home.

The calls follow confirmation from Cabinet Office minister David Lidington that firms working for failed construction giant Carillion on private sector deals will only have two days of government support.

Trade body Build UK estimates that between 25,000 and 30,000 businesses are owed money by Carillion, which spent £925m with local suppliers in 2016.

The Federation of Small Businesses (FSB) called this week for small business in the supply chain to be paid to prevent further business failures.

FSB national chairman Mike Cherry, said: “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees.

“These unpaid bills may well go back several months. I wrote to Carillion back in July last year to express concern after hearing from FSB members that the company was making small suppliers wait 120 days to be paid.

“Sadly these kind of poor payment practices are all too common among some big corporates. Perhaps if they weren’t it would be easier to spot the warning signs of a huge company in financial trouble."

Build UK, which represents construction clients and contractors, is currently working with the government to assess the impact of Carillion’s collapse on the supply chain.

In a statement the association said: “The impact of Carillion entering liquidation will be felt throughout the whole supply chain. Carillion Construction was a Build UK Contractor member and we are in on-going dialogue with the Government, providing information to support its decision making.”

It called on firms affected by the collapse of Carillion to contact the organisation.

“To assist us in understanding the impact across the supply chain, we are collating information on the supply chain’s exposure across various sectors. In particular, how much money businesses are owed and what percentage of their total revenue this represents. Please send any information, which will be treated in the strictest confidence, to info@BuildUK.org”

Rod McKenzie, policy and public affairs director, told MT: “We are extremely concerned following the news of Carillion’s failure – and we are offering all the support we can to our membership and we are trying to understand the scale of the problem. We believe a lot of our members will be affected by this and will be trying to assess its impact on their businesses and we will help in any way we can.”

“Many companies in the infrastructure sector will be affected, as will large road upgrade schemes such as the smart motorway programme which Carillion were involved in.

“Thousands of suppliers are at risk of not being able to claim all the money they’re owed putting their future and many thousands of jobs in jeopardy. We urge the government to move swiftly to offer every support to companies vulnerable to the after-shocks of Carillion’s collapse.

“Likewise we call upon them to ensure work on infrastructure projects on the road network our economy relies on continue without disruption.”

Carillion announced it would enter into liquidation yesterday (15 January) after issuing numerous profit warnings last year.

Topics