Industry calls for contract diversity in wake of Carillon collapse

Published: 15 January 2018 - FRH

The collpase of major construction firm Carlillion into liquidation this morning has far-reaching implications for how the Government awards jobs to major contractors, say the Fedeation of Master Builders, the National Federation of Builders and the Federtion for Small Business.

Brian Berry, Chief Executive of the FMB, said: “Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise.

"It raises serious questions for the Government, not least about its over-reliance on major contractors. The Government needs to open up public sector construction contracts to small and micro firms by breaking larger contracts down into smaller lots. That way, it can spread its risk while also reaping the benefits that come from procuring a greater proportion of its work from a broad range of small companies. Construction SMEs train two-thirds of all apprentices and are a sure-fire way of spreading economic growth more evenly throughout the UK.”

Richard Beresford, chief executive of the National Federation of Builders, said: “When a major contractor goes into liquidation, it highlights the importance of diversifying those to whom you award contracts."

Federation of Small Businesses (FSB) National Chairman Mike Cherry, said: “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees.

"There is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses. Public procurement must be much more small-business friendly, in which it is easier for small firms to navigate the system and the Government should prioritise meeting its target of at least one third of taxpayer-funded contracts going to smaller firms.”

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