Trade bodies ECA and BESA have pressed Carillion liquidators PwC to provide greater certainty to private sector contractors over the outstanding cash owed by the fallen construction giant.
PwC’s David Kelly confirmed they and Carillion will provide suppliers with ‘commitment letters’ that guarantee payment for work undertaken and materials supplied during the liquidation process. However, David advised that work completed before Monday 15 January 2018 will be treated as ‘unsecured debt’, and at the back of the queue for payment.
The liquidator also stated that work had been ‘paused’ on many construction sites until the situation could be evaluated, and he was unable to provide a timeframe for if and when work would restart.
ECA director of business Paul Reeve commented, “We have already heard from of hundreds specialist contractors, across construction and services, who are taking a major hit, and some may not survive. Everybody involved needs to work to prevent a repetition of this situation, and part of that is a legal requirement to pay suppliers promptly.”
“We are encouraged that HM Revenue and the banks will take a sympathetic, long term approach with specific provision for those hit in the wake of the Carillion crisis,” added BESA director of legal and commercial Rob Driscoll. “We are however very concerned that the negative impact on thousands of unsecured SME supply contractor creditors will be unsustainable, creating tension with the Government’s industrial strategy.”
The discussions took place during a meeting on Wednesday 17 January, that was also attended by Business Secretary Greg Clark MP and Small Business Minister Andrew Griffiths MP, along with a range of other trade bodies including SEC Group, BCSA, Build UK, FMB, CECA and the CPA.
Business Secretary Greg Clark confirmed that the banks had committed to provide those affected by the fallout with support and special arrangements. The Business Secretary also noted that HMRC will be taking a ‘flexible’ approach to tax bills, and will provide information on this in due course.
On Monday January 15, ECA and BESA also met with government ministers and officials, including Greg Clark MP, to discuss the immediate aftermath of Carillion’s collapse. During the talks, the two trade bodies called on the government to provide maximum support to businesses affected, and to learn lessons from the crisis and undertake full scale reform of supply chain and procurement practices. The Business Secretary said that the ‘construction sector deal’ would be an appropriate vehicle to bring about structural change in the industry.