Government continues to meet with construction industry taskforce to tackle supply chain and apprentices concerns as political pressure mounts for payment reforms
919 employees working on government or key UK infrastructure jobs for collapsed construction giant Carillion will retain their jobs, the Official Receiver has announced. However, 377 employees on the same contracts will be made redundant as a result of the company entering liquidation last month.
The figures have been announced by the Official Receiver as the government continues to meet with construction industry and training bodies to try and mitigate the impacts of the company’s collapse on the supply chain.
Concerns remain in the industry over both loss of work and payments owed to suppliers including specialist contractors working in HVAC due to the company’s business practices.
The Official Receiver has said that discussions were also ongoing around the status of the company’s wider private sector contracts and the status of future work.
A statement from the liquidator said, “I recognise that this will be a worrying time for all those affected, their families and local communities. I would like to thank all staff for their professionalism throughout the liquidation.”
“I am expecting many employees working on other Carillion contracts to transfer in the coming weeks and we are continuing to keep the workforce updated as these are arrangements are finalised.”
The Construction Industry Training Board (CITB) has meanwhile said this week that around one third of apprentices that had been training with Carillion at the time of the company’s collapse had now received new job offers.
The training board said an estimated 553 of the 1,400 apprentices with the company have taken up new roles in the construction industry with hopes that more would be found suitable placements following special events held across the UK last month.
A £1.5m cash incentive programme has been established to support construction groups, including SMEs to take on employees with 850 groups having responded, according to the CITB.
Gillian Cain, head of apprenticeships with CITB, said small firms had played a key role in filling some of the positions, yet added that “the job is not done”.
She added, “I want to reassure those who have not yet received job offers that the team at CITB will continue to do everything they can to help apprentices find new employers and get on with their training. We are confident that with industry support we can get all apprentices back on track very soon.”
It is understood that a special taskforce of industry stakeholders set up following the announcement of Carillion’s liquidation last month will continue to meet with the Department of Business, Energy & Industrial Strategy (BEIS) to try and help steer the wider government response to Carillion for the foreseeable future.
The taskforce has worked to secure commitments from banking groups and HM Revenue and Customs (HMRC) to provide some support packages for companies facing payroll issues and liquidation as a result of Carillion’s collapse.
Business secretary Greg Clark answered questions on the government’s response to Carillion in parliament this week and was asked whether he would consider use of project bank accounts as a means to protect an estimated 30,000 small firms owed money from Carillion against future insolvencies.
Mr Clark said that taskforce members, such as the Specialist Engineering Contractors (SEC) Group, has reiterated the recommendation as a vital example of payment reform needed in the industry.
He responded, “It is important that we learn all the lessons and apply them quickly, and this is one such suggestion.”
Labour Party MP Rachel Reeves cited the outcomes of a joint select committee hearing on the issue of Carillion also held this week where the chief executive of the Financial Reporting Council (FRC) had been critical of the government response to more closely regulate companies following the collapse of retailer BHS.
She asked, “[The chief executive] told us that there was a lack of government interest in making the necessary changes. In the light of the collapse of Carillion and the threat to thousands of jobs and suppliers in the supply chain, are the government interested in taking action now?”
Mr Clark responded, “I do not agree with the hon. Lady. I engaged the FRC immediately, and it is very important that we and the FRC learn the lessons. We will apply whatever is appropriate that comes from those inquiries.”
The business secretary was also asked about the issue of payment reforms called for by industry bodies such as the SEC Group, BESA and the ECA, along with a growing number of construction representatives.
Mr Clark noted that retentions deposit schemes and project bank accounts were being considered as part of a recent consultation undertaken by the government that has just closed.
He said, “Part of the taskforce that we have established includes [construction industry] representative bodies, and they know that they have my commitment to take all the necessary actions to learn the lessons and protect any future concerns against things that could be learned from this case.”
A number of bodies representing the HVAC industry have recently supported and helped develop a new bill mandating use of third party deposit schemes for any retentions on construction contracts. The proposed legislation was introduced to parliament last month by MP Peter Aldous.
A second hearing of the bill is currently scheduled for April.