Supply chain owed £2bn by Carillion

Grant Prior 7 years ago
Share

Suppliers and subcontractors are owed around £2bn by Carillion.

The figure in the firm’s last results statement for “trade and other payables” highlights how hard the supply chain could be hit by the company’s collapse.

Subcontractors should be offered some protection on most public jobs by the use of Project Bank Accounts.

PBAs ring-fence money from the client and protect suppliers’ cash if a main contractor goes under.

One industry source said: “This is the real acid test for PBAs now as a lot of Carillion’s contracts will have been using them.

“PBAs have certainly helped speed up payments to suppliers but they’ve never seen a test like a firm the size of Carillion going under.”

But millions held in retentions will still be lost despite the use of PBAs.

Hundreds of suppliers have also been using Carillion’s Early Payment Facility system which has processed invoices totaling more than £400m.

Subcontractors get paid earlier that the firm’s standard 120 day terms for a small fixed charge.

Payments are also made directly from Carillion’s bankers but the system has now stopped after the firm’s insolvency.

During a House of Commons debate yesterday Labour MP Kevan Jones said: “Carillion is notorious in the subcontracting industry as a company that pays its bills very late—over 90 days in most cases.

“The Minister has talked about public sector contractors that will need to be paid, but what support will the Government give small businesses that are in non-Government contracts and are still waiting to be paid?”

Minister for the Cabinet Office David Lidington said: “Companies in non-Government contracts that are not involved in the provision of public services would become creditors of Carillion.”

Ian Anfield, managing director at Hudson Contract said: “To many of us who worked alongside or for Carillion, they were affectionately known as ‘Carry on Construction’ run by accountants rather than engineers and quantity surveyors. 

“Sites were hamstrung with so much red tape they could not function as they should.”

Piling specialist Van Elle is among firms owed money having carried out £1.6m of work in December and January for Carillion on Network Rail jobs which has not yet been paid for.

Van Elle said: “The Group will engage with Carillion and its advisers (including the Official Receiver) to determine the status of outstanding payments.”

 

Latest news

Deck falls off huge scissor lift at Winvic site

Two men seriously injured as platform plunges to the ground
1 day ago

Bouygues seals deal for £119m Cardiff college campus

Construction to start in June on two new buildings
1 day ago

Bid race starts for £15bn schools framework refresh

DfE throws framework open to more contractors
1 day ago

Berkeley’s £600m Borough Triangle project approved

Controversial scheme features two towers of 38 and 44-storeys
2 days ago

London Mayor calls in blocked 600-bed student scheme

Refused 20-storey London PBSA block may still be built
1 day ago

HG to build 500-bed London Stratford student scheme

Work will start later this year subject to gateway 2 safety approval
2 days ago

Arrest after pedestrian death on construction site

Tragedy during site preparation works for new Wigan car park
1 day ago

British Steel threatens closure of Scunthorpe blast furnaces

Chinese owners say sectional steel and rail supplies will be maintained
2 days ago

Planning green light for Sheffield warehouse site

Existing factories to be demolished in new scheme for Rula Developments
1 day ago

New rail property company to unlock land for 40,000 homes

First four sites released in Newcastle, Cambridge, Manchester, and Nottingham
2 days ago

Drainage specialist Subscan files administration notice

Specialist employing 131 people files court notice
2 days ago

Four win Network Rail £300m engineering design deal

Eastern region deal will include design for Northern Powerhouse Rail
2 days ago

Funding go-ahead for Banwell bypass after fresh cost hike

Galliford Try contract rises £14m to £64m after final design change
3 days ago

Graham wins Southport £75m Marine Lakes Centre

Firm replaces Kier which parted ways with backer Sefton Council
3 days ago

Chancellor unveils extra £2bn capital spend a year

Construction promised a defence dividend in military base and homes upgrade work
3 days ago

McLaren confirms subcontractor team on £135m warehouse job

Work starts on TN2 Gateway site in Kent.
3 days ago

Vistry profits slump after site costs reporting debacle

House builder launches internal whistle-blowing service in business culture review
3 days ago

Severfield chief to step down

Alan Dunsmore to leave structural steel group by end of June
3 days ago

Funding hurdle remains as Lower Thames Crossing gains consent

Government claims £9bn project may start in 2026 as private finance options explored
4 days ago

Mace wins £600m Euston Tower overhaul

1970s tower's foundations and core to be retained as floor plates extended
4 days ago

Summer start for main works on London green tower

Axa sanctions start at 50 Fenchurch Street 36-storey office block
3 days ago

Japan’s leading flats builder JVs with L&G for UK push

Partners plan to build over 1,000 rental homes in London
3 days ago

Wates submits plan for 1,000 homes Harrow council scheme

Former civic centre Poets' Corner site kicks off housing partnership
4 days ago

Morgan Sindall upgrades forecast for next 12 months

Overbury fit-out arm gets off to a flying start in 2025
4 days ago

Restructure underway at Henry Boot Construction

New management team restructures business after drop in turnover
4 days ago

Government pledges £2bn stop-gap funding for 18,000 homes

Funding avoids cliff-edge in social housing delivery before new grant programme agreed
4 days ago

Just two major new roads schemes to start this year

National Highways sets out one-year interim spending plan after RIS3 delay
4 days ago

Plans go in for £400m GRAHAM Manchester site

Demolition and enabling works underway with main construction set to start next year
4 days ago

Building safety levy rate set at up to £10,000 a home in London

Levy introduction pushed back a year to Autumn 2026 - list of new rates
5 days ago

BAM wins £100m revamp of Broadgate Tower in London

Front of tower 3-storey extension to use cross laminate time and re-used steel
5 days ago

Contractor services