Carillion plan dubbed 'sticking plaster'

Image source, PA

Help offered by the banks to firms left high and dry by Carillion's collapse is no more than a "sticking plaster" solution, industry representatives say.

Business Secretary Greg Clark has said support from a government-led task force and the banks will "maximise continuity" for small businesses.

But Mike Cherry from the Federation of Small Businesses said it was unlikely to be enough for most contractors.

Up to 30,000 smaller firms may be owed money by Carillion.

Carillion, which operated projects from cleaning prisons to building roads, went into liquidation on Monday with about £1.5bn of debt.

The construction giant directly employed 20,000 workers in the UK, and much of its work was contracted out to smaller operators, many of whom are waiting to see if they will paid for work completed in recent weeks and months.

Three banks have said they will provide £225m to provide "tailored support" for small business customers, including capital repayment holidays on loans, help with fees and increases in overdraft limits.

But Mr Cherry said the support did not go far enough.

"It is only going to be a sticking plaster to help those who are viable to continue in business and recover in time," he told the BBC.

"We all need to understand that it is very unlikely - as in any administration or liquidation - that those who have already invoiced Carillion up to the announcement on Monday are going to get anything out of this at all."

Business Secretary Greg Clark told the BBC that the question of whether firms would receive money owed for work they had completed on contract for Carillion "was a question for the Official Receiver".

Build UK which represents workers in the construction industry, estimates that up to 30,000 businesses are owed money by the collapsed construction firm.

However Mr Clark declined to confirm the number.

"There's an exercise going on, quite rightly constructively, to make sure that all of the contractors are identified, that they are given the assistance from the banks which has been very important, but also since most of these contracts were profitable, that they can be re-assigned and they can continue."

'It just digs us deeper into a hole'

Image source, Josh Lee
Image caption,
Mr Lee says the government is "woefully failing" people working on public projects

Josh Lee, joint founder of Ashby-De-La-Zouch-based Larc Construction says Carillion's collapse has wiped out everything he's ever worked for.

He has already laid off 15 of his 20 staff and says he has been left in limbo waiting to see whether any of the £200,000 the firm is owed by Carillion will be forthcoming.

He says the banks' offer of support to businesses like his is "not very useful" since it effectively extends lending which he doesn't want on his business' books.

"It's digging us deeper in the hole. We need helping out of the hole," he says.

Larc Construction has been working on the Midland Metropolitan Hospital in Birmingham. The firm was told to stop work on Monday and has had to leave equipment on site even though they are paying £14,000 a week to hire it.

Mr Lee, a 30-year-old former soldier, says the firm hasn't been paid for the work done in November, December and January.

The business, which was operating on a £1.5m turnover last year, is now looking for new contracts.

"The government is woefully failing people like me who were working on public projects," he told the BBC.