We’ll all pay for collapse of Carillion

LAST week’s devastating, but not unexpected, news about the Carillion collapse is causing major problems for the thousands of businesses up and down the country who have been contractors to this massive public company.

The writing had been on the wall for some time, although some suppliers may have been lulled into a sense of false security by government continuing to hand down contracts to this organisation.

I have had many first-hand experiences of valued customers suddenly hitting the wall, and you, the supplier are left with a substantial debt and nobody to help you, least of all your unsympathetic bank. It is not a pleasant experience – the LDV and Rover tragedies spring to mind.

I think that the time has come for government to legislate in relation to payment terms, preferable 30, but certainly a maximum of 60 days. The snag here is that some unscrupulous customers will look to delay payment by claiming that the work is not up to the specified standard, and that leads into the grey area of interpretation of specification.

Many of Carillion’s contractors were on payment terms of a minimum of 90 days, some 120, so that in effect, they were trading on their supplier’s money, thus avoiding expensive bank support. The result is that, some businesses will have to cease trading, and this domino effect may roll on to others.

Government once again has demonstrated a complete lack of understanding of the real world of commerce by saying that business would carry on, with other contractors taking on the work, using HS2 as an illustration.

Well, yes, they might, but most certainly not at the same price.

Here in the Midlands, a major worry is the desperately needed new Metropolitan Hospital, already late on delivery, and now likely to be pushed even further back. Another contractor has to be found, and it is inevitable that the costs will escalate.

However, my thoughts are with the small contractors and their employees, the real victims. Russell Luckock is chairman of Birmingham pressings firm AE Harris