Banks show support for SMEs affected by Carillion insolvency
Finance and banking trade body UK Finance said this week that major banks are working closely with the UK government to limit the impact of the firm’s liquidation on SME firms.
Brian Berry, chief executive of the FMB, said: “It’s absolutely critical that the banks give the innocent victims in Carillion’s supply chain as much leeway as possible in the short to medium term. We therefore welcome UK Finance’s announcement that lenders are putting in place emergency measures, including overdraft extensions, payment holidays and fee waivers, to ensure those facing issues relating to Carillion’s liquidation can stay on track.
“Leniency from the major banks will make all the difference to the thousands of firms in Carillion’s supply chain as to whether they survive its collapse, or follow suit. The construction industry is the cornerstone of the UK economy so it’s in all of our interests to do what we can to support these small companies and limit the domino effect that Carillion’s demise could have.”
The announcement comes after business secretary Greg Clark, economic secretary to the Treasury John Glen, and small business minister Andrew Griffiths, met banks yesterday to seek assurances that they will support small businesses affected by Carillion’s liquidation.
Banks represented at the meeting included Barclays, HSBC, Lloyds, RBS, Santander, Shawbrook and Aldermore. They were joined by the British Business Bank.
Following the meeting, Greg Clark MP said: “It is essential that small businesses exposed to the Carillion insolvency are given the support they need by their lenders.
“I chaired a meeting this morning of high street banks to ensure that they are in contact with customers impacted, that they have in place the advice and support needed and that any individual cases are escalated and dealt with sympathetically, swiftly and appropriately.
“I will continue to meet with them in the days and weeks ahead to ensure these commitments are being acted on.”
John Glen added: “I am pleased to see that the UK banks are taking such a constructive approach, proactively contacting affected customers, and taking the required steps to help those facing short term issues as a result of Carillion going into liquidation.”
Alongside this, HMRC has outlined the support being offered to those businesses contracted to Carillion that may be concerned about their ability to pay tax. HMRC are providing practical advice and guidance to those affected through its Business Payment Support Service (BPSS).
The Insolvency Service has also confirmed that they have contacted all of Carillion’s private sector service customers, such as those working in facilities and management, with over 90% stating they wish to continue with current arrangements. This will provide funding which enables the Official Receiver to retain the employees working on those contacts.
Separately, the Insolvency Service has confirmed that work has paused on construction sites, pending decisions as to how and if they will be restarted.
The Federation of Small Businesses (FSB) said the emergency bank support must pave the way for a Carillion task force.
National chairman Mike Cherry said: “The emergency measures put in place by banks for customers hit by Carillion’s collapse will provide some respite at a desperate time for hundreds of small firms. Many hundreds more are still yet to feel the knock-on impacts of the giant’s demise. It’s critical that they also receive support in the months ahead.
“We now need to establish a Carillion task force dedicated to helping all affected small firms and workers to recover and get back on their feet. Following Rover’s collapse in 2005, I was involved in a similar initiative where we successfully supported suppliers and found new opportunities for all of the firm’s apprentices.
“This sorry saga has shown that the Government’s reliance on a small number of huge outsourcing firms poses a risk to the nation’s economic stability. As thing stand, our procurement regime is stacked against small firms. Providing small businesses and the self-employed with more opportunities to secure public contracts will mean less risk and better return for the taxpayer. At the very least we need to see the reinstatement of the target date for achieving 33% of all public sector procurement with smaller businesses, to 2020.”
Scottish companies affected by the Carillion insolvency can call Scottish Enterprise on 0300 013 3385 or register their details here.
The redundancy helpline operated by Skills Development Scotland is 0800 917 8000, with help also available here.