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Carillion treated small firms with contempt, says FSB

Responding to publication of the Business, Energy and Industrial Strategy and Work and Pensions Committees’ full report on Carillion, Federation of Small Businesses (FSB) Area Chair for Greater Manchester, Chris Manka, said: “The report lays bare the contempt with which Carillion treated its small suppliers, across the UK and here in Greater Manchester where the effects are still being felt. 
“Originally an attempt to shore up its balance sheet, the construction giant’s shocking 120 day payment terms have destroyed small firms and put important infrastructure projects back by many months. 

“The shockwaves are still being felt – just look at the A6MARR project in Stockport, a crucial new road scheme now delayed until Autumn and causing misery for businesses and communities caused by continued congestion. It’s also likely office buildings in the city centre, student accommodation, rail projects, and other road improvement schemes will also be delayed. It’s nothing short of scandalous.
“The report is right to describe the Prompt Payment Code, which was signed by Carillion, as ‘wholly ineffective’. Far more needs to be done to end the £14 billion late payment crisis which causes 50,000 business failures a year. That includes preventing late payers from winning public contracts.  
“The Government needs to learn lessons from the whole sorry Carillion mess. Project Bank Accounts – where money for public projects are held in trusts as opposed to by tier 1 contractors – must become the norm. In instances where these accounts are not used, government should be called before parliament to explain why that’s been the case.

“And no one should forget the role the big four accountancy firms played in this debacle. Ernst & Young, PWC, KPMG and Deloitte all still have questions to answer around how this was able to happen under their noses.”