As the political furore about the collapse of the UK’s second-biggest construction company continues, suppliers and sub-contractors to Carillion have been assured that they will be paid for work carried out after the appointment of the official liquidator on 15 January.
Things look less certain for those already owed money at the time of the collapse. It was reported by The Financial Times that the company had just £29m in the bank when it went bust and some sub-contractors are owed multi-million pound sums and have had to lay off considerable numbers of staff.
The Insolvency Service has said that 90 per cent of the private sector companies currently employing Carillion on projects want the work to continue, although it has confirmed that work has paused on all Carillion construction sites, pending decisions as to how and if they will be restarted.
The TTA is a trade association member of Build UK, an industry body that represents a number of construction related trade associations and major contractor groups. Build UK is currently in discussions with the Government, providing information to support its decision making. To assist in understanding the impact of the collapse across the supply chain, the TTA is working with the CPA (Construction Products Association) and Build UK to ensure that members’ views are fed back to the Secretary of State at future meetings and discussions.
In order to inform these discussions, TTA members are invited to provide the following information – which, please be assured, will be held by the TTA in strictest confidence, and used only for the purpose of feeding back to CPA and Build UK on this issue.
What the Secretary of State would like to know is…
Q1. What % of your turnover do your contracts with Carillion account for?
Q2. Would you be willing to disclose the total value of those contracts (£m)?
Q3. What other issues have you encountered or do you expect to encounter with Carillion projects you are involved with (including what hit do you expect to take)?
Build UK believes that the Carillion debacle raises serious questions about the construction industry’s business model and it is working with the industry, its clients and investors to learn lessons and embed change through the supply chain.
There are also now questions about why the Government granted Carillion more than £1 billion in new contracts even after a profits warning in 2017. Recent developments have also reignited debate about the stability and longterm financial wisdom of privately funded public contracts.
For the time being, the the priority of all involved is to ensure the continuity of public services while securing the best outcome for creditors. Unless told otherwise, all employees, agents and subcontractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidation. Employees, customers, suppliers and other interested parties affected by the collapse of Carillion should visit www.pwc.co.uk/carillion or call 0800 063 9282.
Secretary of State Greg Clarke, with support from the small business minister Andrew Griffiths, is chairing a taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation on construction firms, particularly SMEs and those working in the sector. The taskforce’s attendees include representatives from leading business bodies, the construction trade sector, unions, banks and government.
Meanwhile the CITB has confirmed that in partnership with the Government and employers it is establishing a project team that will prioritise the retention and redeployment of the 1,400 apprentices employed by Carillion.