Mark Casci: Dire consequence of Carillion collapse for small firms

Blue Monday proved to live up to its name with the news that we were all dreading.

A sign at a Carillion construction site in central London, as the Government said all Carillion staff should still come to work and "those already receiving their pensions will continue to receive payment", following the construction giant's collapse. PRESS ASSOCIATION

Carillion, the UK’s second largest construction company, collapsed into liquidation following a string of profit warnings and massive amounts of debt.

Right on queue spokespeople from the Government, one of the troubled firm’s best customers, to the firm itself were wheeled out on the usual platforms to talk of the huge amounts of work that were going in to rescue this fallen giant.

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However, as the dust settles in the coming days and weeks it will become clear that this overloaded behemoth of a firm and its rapid disintegration has been nothing short of a debacle.

The Carillion call centre in Sheffield

To give some clear context, Carillion has 450 separate contracts with central Government alone. Some of these deals, most of which are valued in the millions, were signed as recently as late last year when the firm had already began its tailspin into oblivion.

Indeed, the scale of work which Whitehall has signed up Carillion to undertake was perhaps best illustrated when the Cabinet Office press office told me on Monday morning that it could not furnish me with a list of all of the deals it had done with the firm with the explanation “we don’t have that kind of thing to hand”.

Critics were quick to take aim at the Government in the wake of the collapse, and with some considerable justification.

The old adage concerning the dangers of putting all of one’s eggs in one basket rang incredibly true for this sorry tale.

The Carillion call centre in Sheffield

At a time when ministers and civil servants are helpless, distracted by Brexit, a huge amount of additional work will now have to be undertaken to unravel all of the deals Carillion has concerning the maintenance and operation of hundreds of Government buildings, schools and hospitals all over the country.

As I know only too well from my friends and colleagues employed in the civil service, this is a task they needed like a hole in the head.

Our Government now needs to seriously up its game in terms of when it comes to the procurement of contracts, particularly in terms of ongoing management and service improvement. Across a number of areas, it does seem that government is not good at this issue.

As one analyst at City Index rather succinctly put it, “this is yet another huge embarrassment for the UK government, which appears to be moving from mishap to mishap”.

The Carillion name is attached to many of our boldest and most high-profile infrastructure projects, from HS2 to the Great Yorkshire Way.

As eye-catching and vital pieces of work for the future prosperity of our economy it is right that they should be given such attention.

However, as evidenced by the rise in the value of shares with Carillion’s main competitors, it is a virtual certainty that these contracts will be filled without too much fuss.

My real concern for the fallout concerns not only the tens of thousands of people employed directly by Carillion but the countless more in its supply chain who will now find themselves in an unenviable no man’s land.

Government and banks refused an eleventh hour bail out for Carillion, balking at the considerable financial encumbrances it had accrued.

At the very least hundreds of small firms will be in serious financial danger as a result of Carillion’s demise.

To reel off one statistic, small firms in the construction sector train two-thirds of all apprentices.

The bailing out of large institutions in the banking sector almost a decade ago has left a deep wound on the country as a whole with many deeply concerned as to its morality.

The failure of Carillion and all those who depended on it may be its latest and most tragic legacy.