WILL THE GOVERNMENT TURN ITS BACK ON SME SUB-CONTRACTORS?
Iain McIlwee, CEO British Woodworking Federation, said:
“The British Woodworking Federation (BWF) represents the UK’s £3.8bn woodworking sector, a craft at the heart of the UK’s construction sector, which employs approximately 60,000 people around the country.
“As the news of the liquidation of Carillion breaks, it is almost ironic that we are putting our final comments in on the Government’s consultation into retention payments in the construction industry. This debate is not about whether the state should bail out Carillion, but whether Government can in all conscience turn its back on a supply chain of SMEs who will end up carrying the can for poor procurement, bad business management and an endemic failure by the Government to address some of the archaic procurement practices surrounding late payments and retentions that place risk unfairly on SME sub-contractors. Many of the creditors are SMEs and the sums, whilst likely to be significantly lower than the liquidators will take, could define the future of these businesses - it would be a gross injustice if their money, unfairly held, is lost in this process.
“Frankly to my mind the Government is complicit in the sorry saga that is unfolding and we need decisions fast. As a short term we need to see some security against these retentions and unjust payment clauses. Moving forward we urge the Government to develop a structured and more consistent legislative process to deal with market failures, be they banks, construction firms or steel manufacturers. We cannot rely on arbitrary decision making and political posturing. There needs to be clear process to ensure those responsible foot the bill and ensure society and supply chains do not suffer unduly. The Government consistently fails to recognise the stress of running a small business and keeping people employed - a lot of business owners in this supply chain won’t be sleeping soundly until this is resolved."
Iain McIlwee, CEO British Woodworking Federation
The BWF's statement has been carried in the Sun, Independent and Guardian with members fielded for comment on various radio and media interviews in the National and Trade Press. BWF would like to extend a personal thanks to those of you who have participated – we need to keep the pressure on Government, both directly and through the media to live up to their responsibilities here.
**Carillion Update for BWF members**
BWF has been working closely with members, politicians, CITB and Build UK to understand the impact and intricacies of the collapse of Carillion. We are aware that some BWF members may be affected and below we provide a bit of an update on some of the key developments. This is still a live situation so please be aware that the information below was last updated on Thursday 18th January.
Where we stand
- The Government’s Insolvency Service has confirmed that work has paused on all Carillion construction sites, pending decisions as to how and if they will be restarted
- Companies currently engaged in Carillion projects (contracting to Carillion) should have been contacted directly by PWC to advise of any new arrangements (from 15th January)
- If you are an unsecured creditor (i.e. you have a claim for arrears arising before 15 January 2018) in due course you will be asked to register your claim with PwC. You should check their website at regular intervals for information
- BuildUK, working with Wedlake Bell, have published an excellent factsheet covering the points above in more detail and answering FAQs from those companies affected
- On Wednesday, Suzannah Nichol (CEO of BuildUK) attended a further meeting with Government and PwC where she highlighted the need for PwC to differentiate between Carillon’s construction projects and service contracts when communicating with creditors. PwC has since met with the banks who have committed to agreeing special arrangements for affected creditors – see statement from UK Finance (the trade body for lenders).
- CITB’s project team was set up on Monday 15th Jan, seeking to contact and place 1400 Carillion apprentices. Some members will currently be engaging apprentices employed through Carillion and in this instance CITB is keen for companies to make contact to help with any transitional arrangements. They are looking bring these and all affected apprentices into CITB Apprenticeships and where possible to find, or preserve, suitable employers for them. To encourage employers to take on these individuals, CITB plan to pay to in-scope employers an encouragement grant of £500 to take on a Carillion apprentice, with a further £500 retention grant after 6 months with them. This is in addition to any apprenticeship grants these employers are already entitled to. There is a dedicated web page offering support for Carillion apprentices or employers on our website at www.citb.co.uk/carillionapprentices.
To support the wider Carillon workforce CITB and the Department of Work and Pensions have agreed that they will set up a help line for any employers interested in taking on new staff, have vacancies or are interested in helping in any way with redundant ex-Carillion employees or employees affected in their supply chain. Employers wanting to participate should contact Employer.firstname.lastname@example.org.
We are grateful to those members who have written to their MP asking them to lend their voice to supporting the SME subcontractors who have suffered due to the poor working practice, bad management and ill-advised procurement decisions of others.
We have drafted a template if you wish to do the same and if you are willing to talk to journalists there is still plenty of interest in garnering the views of the woodworking sector. All comments, requests and offers through to email@example.com.
BWF and Build UK continues to work with Government and PwC to understand which construction projects were being undertaken by Carillion.
To ensure that we can support the supply chain companies at risk and provide information to Government on the impact on the supply chain, we are continuing to ask for information on:
· The amount(s) that businesses are owed; and
· The % of turnover this represents.
Please send this information, which will be treated in the strictest confidence, to firstname.lastname@example.org
The BWF team are supported by a legal helpline that we can connect you to if you need any additional advice. I also draw your attention to some great resources available via the website if you want to review your credit management processes (including a free-to-use, unlimited credit checking service). If you have any outstanding questions or wish to make comment, as ever, please don’t hesitate to contact us.
Further suggested reading: