Carillion: Support for small firms ends

16-01-2018

Firms working for failed construction giant Carillion on purely private sector deals will only have two days of government support, Cabinet Minister David Lidlington has warned.

Carillion spent £952m with local suppliers in 2016 and used an extensive network of small firms, who are now waiting to learn if they will be paid. Approximately 30,000 firms are owed money by Carillion.

Britain's second largest construction firm, which employs 20,000 people in the UK, went into liquidation on Monday with debts of about £1.5bn. Carillion's work stretched from the HS2 rail project and military contracts to maintaining hospitals, schools, and prisons.

On Monday, Mr Lidington said there would be government support for public sector contracts. Carillion had previously said it used a wide range of small companies because it was "committed to generating regional economic growth and development".

The government knew of Carillion's reliance on sub-contractors, but continued to award the company lucrative work despite growing concerns about its finances.

Carillion was one of the contractors working on HS2 - the high-speed rail network, which will run from London to Birmingham and to Manchester and Leeds.

      

Pay questions
On Monday, Mr Lidington said the government was stepping in to pay employees and small businesses working on Carillion's public contracts and assess the distribution of work among other companies. However, companies working on private projects will get no such support.

Executive pay
There is also mounting criticism of the pay packages enjoyed by directors in the run-up to Carillion's crisis. Former chief executive Richard Howson, in charge until last year when Carillion issued the first of three shock profit warnings, will continue to be paid until October.

Mr Lidington told the Commons on Monday that the official receiver had the power to impose penalties if it uncovered any misconduct.

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Source: BBC