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Carillion | Government sets up taskforce to support small firms

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Business secretary Greg Clark has announced a new taskforce to help small firms hit by the Carillion crisis.

The taskforce, which will include businesses and trade bodies, held its first meeting late yesterday.

The meeting covered issues such as support from banks and tax authority HMRC, as well as the future of apprentices.

Clark said last night: “Today’s meeting is the next step in a series I have held this week. It got key people round the table to drive forward steps that we believe can give confidence to workers and the supply chain; support from banks, the ability to link workers with employment and support for apprentices.

“I am determined that collectively we will take the steps necessary to give workers and businesses the information they need at this difficult time.”

Banks have committed funds to support businesses hit by Carillion’s insolvency. Lloyds is creating a £50M fund, RBS is offering £75M and HSBC £100M. HMRC is also offering support, by allowing firms to pay tax in instalments and by suspending debt collection proceedings.

Meanwhile, contractors are urging MPs to support new legislation going through parliament to protect payments owed to the supply chain. The call has come following Carillion’s collapse.

Members of the Specialist Engineering Contractors’ Group have also MPs to insist the government back’s the Construction (Retention Deposit Schemes) bill. This would ensure that payments made to the supply chain for projects worth over £1M, are routed through a project bank account rather than remaining in the hands of main contractors.

In the event of a collapse, the Group said this would ensure the supply chain ws paid and that there would be less disruption to public sector projects.

Highways England already does this for its projects and project bank accounts are mandatory for public projects worth over £4M in Scotland and worth over £2M Northern Ireland and Wales. There is only a “strong recommendation” the accounts are used in England the contractors claimed.

The Specialist Engineering Contractors’s Group claimed Carillion’s collapse had caused “millions” of pounds of retention money to be lost. This money was held by the firm as security in case of defects, but the group said retaining the money was actually being used as a way of bolstering its working capital.

The lobbying group also wants the government to issue “strong” guidance to all public sectors to operate a yellow/red card system to highlight the failure of main contractors to pay their supply chains within 30 days. A red card would result in a contractor being barred from bidding for public sector work for at least two years.

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