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Thousands of small firms at risk as Carillion fails

16 January 2018

Thousands of small firms at risk as Carillion failsUp to 30,000 suppliers, many of them small businesses, are owed money by the failed construction firm Carillion.

On Monday, Cabinet Office minister David Lidington announced that the Government will pay employees and small businesses working on Carillion's public sector contracts. However, the Government has said today that suppliers involved in private sector work with Carillion will only have two days of Government support.

Carillion is Britain's second largest construction firm; it went bust on Monday with debts of about £1.5 billion. According to the BBC, Carillion spent £952m with local suppliers in 2016 and used an extensive network of small firms. Trade body Build UK estimates that between 25,000 and 30,000 businesses are owed money by Carillion.

Mike Cherry, chairman of the Federation of Small Businesses (FSB), 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."

The FSB campaigns to tackle the UK's late payment culture. "Sadly these kind of poor payment practices are all too common among some big corporates," said Cherry. "Perhaps if they weren't it would be easier to spot the warning signs of a huge company in financial trouble."

He added: "When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses. Public procurement must be much more small business friendly, in which it is easier for small firms to navigate the system and the Government should prioritise meeting its target of at least one third of taxpayer-funded contracts going to smaller firms."

Accountancy firm PwC, which is overseeing Carillion's liquidation, said in a statement: "Unless told otherwise, all employees, agents and sub-contractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidations." According to the BBC, however, there are reports that work has already stopped on some Carillion projects.

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