The most shocking thing about the Carillion disaster is how the UK’s second-biggest contractor could go from being the industry’s most profitable to its biggest loss-maker in little more than a year.
As the cliché goes, the bigger they are the harder they fall, and when a Tier 1 contractor like Carillion topples, legions of suppliers and subcontractors in the supply chain are buried under the rubble.
Carillion collapsed owing about £800m in retentions to its subcontractors; for years the abuse of retentions has been a major cause of strife in the industry. Ironically, Carillion’s collapse came just a week after the first reading of Conservative MP Peter Aldous’ private member’s bill in parliament, setting out proposals to amend the Construction Act and protect SMEs against retentions abuse. It’s the latest in a long list of attempts to tackle this old problem and, until Carillion fell, few held out much hope of it passing into law.
But thanks to Carillion, something might now actually happen.