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Small firms will pay the price for Carillion collapse
Anger is growing following the collapse of the construction and services giant Carillion – the country ’ s second biggest contractor . The group has gone into liquidation , putting thousands of jobs at risk . Construction leaders believe it will be smaller firms who have to pick up the pieces .
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SUPPLIERS AND subcontractors , numbering in their thousands , can expect to go unpaid for work they may have already completed or materials delivered , leaving them exposed to risk of going under too . Some 30,000 UK firms are thought to be owed money by Carillion , with some owed six-figure sums .
Reports claim £ 1bn-worth of projects have stopped in the wake of the collapse , including the Midland Metropolitan Hospital , the £ 154m Angel Gardens scheme in Manchester , a £ 100m redevelopment of a former brewery in Sunderland , a £ 75m student accommodation project for Manchester University and the £ 60m One Chamberlain Square scheme in Birmingham .
The crisis has also hit local councils ; Lincolnshire County Council now has to find a replacement contractor for its £ 97m bypass , and Leeds City Council has to look for a new contractor to build its £ 115m East Leeds Orbital Road .
Just as importantly , the demise of Carillion has raised big questions about more taxpayer money being used to support the construction sector - although ministers are insisting there will be no extra cost to the taxpayer stemming from the collapse .
CUT RED TAPE FOR SMALLER FIRMS
The Federation of Master Builders fears for the collateral damage from the Carillion crisis . Chief executive Brian Berry said : “ Carillion ’ s liquidation raises serious questions for the government , not least about its over-reliance on major contractors . The government needs to open up public sector construction contracts to small and micro firms by breaking larger contracts down into smaller lots . That way , it can spread its risk while also reaping the benefits that come from procuring a greater proportion of its work from a broad range of small companies . Construction SMEs train two-thirds of all apprentices and are a sure-fire way of spreading economic growth more evenly throughout the UK .”
He later told Radio 4 ’ s Today programme : “ Now we are in a very precarious position while thousands of workers don ’ t quite know what their position is and often they can ’ t get on site . Carillion aren ’ t actually doing the work . They are relying on sub-contractors to do the actual building work . Those companies are relying on the money coming from Carillion . That has stopped .”
Steve Mansour , CEO of building warranty specialists , CRL commented :
“ It is incredibly sad that Carillion has gone into liquidation , especially for the workers now faced with uncertainty . The clear message to government , however , is that it must move away from over-reliance on huge corporations , and cut the red tape and bureaucracy that smaller firms face on a daily basis . This presents a huge opportunity for bold and venturous SME developers and builders : not only will they continue to be the backbone of the industry , but we are expecting them to step up with agility , creativity , and new techniques . “ It is imperative that the government encourages entrepreneurialism and further innovation in the construction industry , and works toward spreading economic growth more evenly throughout the UK . This will spur confidence which has been desperately lacking - and will help build a better Britain .”
‘ MAJOR CORPORATE SCANDAL ’ Alasdair Reisner , chief executive of the Civil Engineering Contractors Association , said : “ The news is extremely worrying for Carillion ’ s staff and suppliers . In this challenging climate , it is vital that industry and government work together to provide support to those affected by Carillion ’ s liquidation . We will work with the government and other industry representatives to identify where and how this support can best be provided .”
Some thought there was more to the collapse than straightforward incompetent business management .
Former National Infrastructure Commission chairman Lord Adonis told Talk Radio that the collapse of Carillion was “ one of the major corporate scandals of our times ”. He said : “ Books and films will be made of it , a bit like Enron .”
He said he had no evidence of any crimes having been perpetrated but said “ big questions need to be asked of the auditors in cases like this .”
Other political opponents of the government , including trades unions
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