Crack­down needed on late pay­ers

Sunday Express - - LETTERS - By Ge­off Ho By Frank Field MP

THE GOV­ERN­MENT needs to do more to stamp out late pay­ment prac­tices to pre­vent sub­con­trac­tors be­ing burnt by the col­lapse of firms like Car­il­lion, small busi­nesses say.

Wed­nes­day marks the first an­niver­sary of the demise of Car­il­lion, the for­mer con­struc­tion to out­sourc­ing giant, which saw 20,000 jobs lost and the pen­sions of nearly 30,000 staff and for­mer em­ploy­ees com­pro­mised.

Its col­lapse spurred a Gov­ern­ment clam­p­down on late pay­ment prac­tices, but the Fed­er­a­tion of Small Busi­nesses (FSB) said more needs to be done to pro­tect SMEs that work in the pub­lic sec­tor sup­ply chain as sub­con­trac­tors.

Prior to its demise, Car­il­lion was no­to­ri­ous for pay­ing its sup­pli­ers late, de­spite be­ing sig­na­to­ries to the Gov­ern­ment’s prompt pay­ment code.

FSB national chair­man Mike Cherry said: “A year on, we have seen the Gov­ern­ment make some moves to im­prove pub­lic pro­cure­ment and stamp out poor pay­ment prac­tices. Re­cent reforms to crack­down on pub­lic sec­tor sup­pli­ers that do not pay on time are wel­come and send a clear mes­sage that pay­ing late is not okay. More needs to be done though if we are to stamp out the prac­tice for good.”

Cherry added that the col­lapse of Car­il­lion laid bare the “shock­ing way” some big busi­nesses bully sup­pli­ers with late pay­ment and un­rea­son­able terms. Its fail­ure harmed con­trac­tors across the coun­try as they were left out of pocket, and “in the worst cases, small busi­nesses were de­stroyed,” he said.

The manag­ing di­rec­tor of one SME that worked for Car­il­lion on a PFI project said his firm barely sur­vived the ex­pe­ri­ence: “We came as close to go­ing out of busi­ness as you pos­si­bly can. When it col­lapsed, we had to lay off 60 guys and find work for se­nior peo­ple who were just left sit­ting there.

“It wasn’t just the money they owed us, it was the detri­men­tal ef­fect it had on our order book, let­ting peo­ple go, and when Car­il­lion went un­der, other com­pa­nies started to hold onto cash longer.” ruth­less few run­ning busi­nesses – and through them our pub­lic ser­vices – as a per­sonal piggy bank.

Other mas­sive out­sourcers seem to be tee­ter­ing on the brink: what on earth will come to light about their op­er­a­tions if and when they fall?

We’ll keep mak­ing this case un­til it is an­swered, but it is long past time for the Gov­ern­ment to get Bri­tish busi­ness work­ing prop­erly for or­di­nary Bri­tons.

BAD FOR BUSI­NESS: Car­il­lion’s demise a year ago had a big im­pact

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