£75 millions owed - and subbies at back of queue
Carillion owes around £75 millions to approximately 80 engineering services firms who have been providing works such as electrical, plumbing, gas, fire safety, security and HVAC installation.
But on 17th January, BESA and ECA met with liquidator PwC and the government. PwC said any private sector work undertaken by Carillion suppliers before 15th January 2018 would be ‘unpaid’. Instead, outstanding monies will be treated as unsecured debt and placed at the back of the queue behind other creditors.
A snap poll by BESA and ECA gathered data on payments owed, and the associations believe the overall losses are likely to be far higher in the long-term. Micro-firms, with less than ten employees, are owed an average of £98,000. Some of the larger companies with between 50 and 249 employees are owed £236,000. And the largest contractors with over 250 employees are owed an average of £15.6 millions.
Balfour Beatty did not take part in the BESA and ECA survey. However, in a statement on its own website it estimates its exposure to Carillion’s demise, stating: “The cash impact to Balfour Beatty is likely to be an outflow in the range of £35 million to £45 million.” Balfour Beatty is in joint venture with Carillion on three projects: the Aberdeen western peripheral route; the A14 in Cambridgeshire; and the M60 Junction 8 to M62 Junction 20 scheme.
BESA president, Tim Hopkinson, says: “We knew the fall-out from this seismic episode would be extremely serious, but these figures give us a clearer picture of just how hard our sector is going to be hit in terms of the thousands of pounds of unsecured debt that will be lost by ordinary, hard-working small businesses, jeopardising their future and the future of their staff.”
Paul Reeve, ECA director of business called for government and banks to protect and support SMEs in the construction and services sector: “The government should also introduce legal measures to ensure SMEs are not continually exposed to upstream insolvency.”
BESA and ECA are also supporting a Bill tabled by Peter Aldous MP, which is currently going through Parliament. See Aldous Bill for more.
Also see our exclusive interviews on MBStv as we talk to BESA’s Rob Driscoll, Alexi Ozioro and BESA President Tim Hopkinson for the latest on the Carillion collapse - and how contractors can find help and advice.