Updated: 26th January 2021
In the days prior to the collapse of Carillion, the government ruled out the possibility of stepping in and using taxpayers’ money to save the doomed construction company, reasoning that using public funds to help prop up a private company was unfair. However, following its entry into liquidation, the focus then moved away from Carillion as a company, and instead shifted to the devastating impact this could have on the quality of the country’s public services, as well as the livelihood of the thousands of workers, subcontractors, and suppliers who relied on Carillion to pay their wages.
The demise of Carillion is not simply another company which has gone bust; their liquidation has the potential to cause the government serious headaches. Carillion were big players in the world of public sector contracts and were leading several major projects including building new hospitals in Liverpool and the Midlands, as well as the bypass in Aberdeen. Despite being best known for its construction projects, Carillion was also a giant in the services industry, and held numerous important contracts such as providing school meals, hospital cleaning, and the maintenance of 50,000 army homes, amongst others.
The silver lining for Carillion’s subcontractors is that these vital projects and services still need to be delivered; ensuring this is done is of paramount concern for the government during these troubling times. In light of this, the government announced that those working on public sector contracts will continue to be paid in order to keep things running smoothly.
The government also encouraged workers on Carillion’s private sector contracts to show up to work as normal, promising to pay their wages for the 48 hours following the announcement of the liquidation. Following this, it was announced that 90% of Carillion’s private sector clients have indicated that they are happy for Carillion’s subcontractors to continue providing the services in the short-term, securing their wages for the time being. How long this support will last is unclear, however, we can be sure this will not be indefinitely; ultimately these contracts will be re-tendered and taken up by alternative providers.
As well as the promise to continue to pay those working on private sector contracts, the government have pledged their help in a number of other ways. HMRC have promised to provide a sympathetic service via its Business Payment Support Service (BPSS) to those who fear their ability to keep up with their tax obligations will be severely compromised following Carillion’s liquidation. In a similar vein, banks have been urged to contact consumers who may be negatively impacted and offer support and help over the short-term. This may take the form of late payment waivers, or overdraft extensions.
The fallout of the Carillion collapse is likely to be lengthy and potentially devastating to some small businesses. If you are worried about how this may affect your company, you should seek expert help and advice as a priority. The experts at Real Business Rescue will take the time to understand your situation and will talk you through the various business rescue, recovery, and restructuring options. The worst thing you can do is ignore the problem; there are solutions out there and the sooner you get in contact with us, the more of these will be available to you. We have an extensive network of 100 offices offering confidential director support across the UK.
13th October 2021
The Bank of England has said it anticipates that rates of corporate insolvency will increase in the coming weeks following the removal of restrictions on winding up petitions.Read More