Business secretary Greg Clark has admitted that government oversight of all public sector contracting must be scrutinised following Carillion’s collapse, after his Labour opposite number questioned why 30-day payment was not enforced.
Responding to a question from shadow business secretary Rebecca Long-Bailey on why regulations requiring 30-day payment terms on public contracts were not enforced on Carillion, Mr Clark said: “The scrutiny of what went wrong in Carillion […] and the oversight that took place across the whole of the public sector in terms of contracting, need to be looked at and will be looked at.”
He added that the government would take action where it was deemed to be required.
Carillion implemented an early payment facility in March 2013 than required suppliers to adopt 120-day payment terms.
Ms Long Bailey questioned why warnings from the Federation of Small Businesses and the Specialist Engineering Contractors Group over Carillion’s terms in July 2017 were ignored.
Earlier this week the Insolvency Service chief executive Sarah Albon told a select committee hearing into Carillion that liquidation special managers PwC, when dealing with future payments for subcontractors, would move away from 120 days and would look to meet “industry standard” payment terms.
Responding to questions from MPs about the money lost by businesses in Carillion’s supply chain following its collapse, Mr Clark said he had met representatives on the day Carillion fell into liquidation and their “first request” was for “leniency” from the banks.
The business secretary told the Commons that banks had “explicitly committed to help” affected customers and they had pledged to “deal individually with those hit by the contractor’s demise”.
Mr Clark also promised to look at the idea of holding money owed to small firms in project bank accounts.
Yesterday CN revealed that subcontractors on Carillion’s problem Royal Liverpool Hospital job had been left “in the dark”, with PwC reportedly failing to provide details of how the project can restart.