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Carillion Collapse Sends Shockwaves Across The UK

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The collapse of construction giant Carillion could spell havoc for the UK’s small business economy, the country’s SME trade body has warned.

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The massive building services conglomerate has been forced into liquidation with debts in excess of £2bn, putting 20,000 jobs at risk.  As a major government contractor, there are immediate concerns over infrastructure and maintenance projects covering schools, hospitals and transport.

 

Mark Berry, head of the Federation of Small Businesses (FSB), says the failure of a company the size of Carillion could also have a devastating impact on the hundreds of small suppliers and sub-contractors who rely on its business.

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In a press release issued by the FSB following the news that Carillion had gone into liquidation, Berry revealed he had written to the company last year to express concern at the introduction of 120 day payment terms for its suppliers.  He now fears that small businesses could find themselves in an even worse position waiting for overdue payments as banks and other large debtors scramble to salvage what they can from the stricken giant.

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“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”.

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“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.”