Carillion crisis early fall-out: Small firms at risk

SMALL firms working for failed construction giant Carillion on purely private sector deals will only have two days of government support, Cabinet Office Minister David Lidington 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.

Employers' groups are trying to assess the exposure of small firms, but said many faced financial hardship.

Critics want a review into the crisis.

Britain's second largest construction firm, which employs 20,000 people in the UK, when it went into administration yesterday.
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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 has previously said it used a wide range of small companies because 'we remain wholly committed to generating regional economic growth and development.' 

But the head of the Federation of Small Businesses said thousands of jobs and livelihoods were now at risk because those firms would be at the back of the queue for payment.

Mike Cherry said it was a situation made worse because Carillion extended its payment schedule to suppliers last year.

'These unpaid bills may well go back several months," he continued. "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.'

A partner at one accountancy firm, who asked not to be named, said small firms were looking at total losses stretching into hundreds of millions of pounds.

'Asset sales won't even raise enough to cover the debts of senior bank creditors, so many small firms won't see a bean,' he said.

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