Carillion and Public Sector Outsourcing

Alex Chalk Excerpts

Wednesday 24th January 2018 Commons Chamber

[Alex Chalk (Cheltenham) (Con)]

In the time available to me, I want to say a few words about a business in my constituency—a subcontractor that has been dealt a hammer blow by Carillion’s collapse—and to make three points. First, I will identify the human impact, which is perhaps taken as read but bears repetition. Secondly, I want to shine a light on the fact that the collapse has exposed market abuse by the big players against small businesses, which we need to look at. Thirdly, there is the potential to recover the situation, so I want this to be a constructive contribution.

My constituent Josh Lee is the director of Larc Construction and his business partner is James Crisp. Both of them are former soldiers and saw action in Afghanistan—in the Parachute Regiment and the Royal Anglian Regiment respectively. One of them was blown up for his troubles but, happily, he recovered. Larc Construction, which is a small contractor, won a contract with Carillion in July 2017 to provide service trenching and ducting at the Midland Metropolitan hospital in Birmingham. As one of the smallest contractors—here is the rub—making its way in the construction world and seeking to establish its reputation with a new client, it did everything that could reasonably be expected of it. It completed its work on time and to a high standard and helped out with additional jobs on site and so on. What is more, to establish its credentials further, it agreed to Carillion’s request to delay the drawdown of its monthly invoice payments for 120 days, because Carillion wanted it to do that to prove that it was creditworthy. The irony is overwhelming.

The upshot is that Larc Construction has been paid for its work to the end of October, but is now owed £200,000. That is not profit; it needs that money to settle its own invoices. If it does not receive a significant proportion of the money by the end of the month, there is every chance it will have to fold, putting colleagues, some of whom are former comrades, out of work. To make matters worse, Larc is in a Kafkaesque situation whereby its plant and machinery, which is costing £1,500 a week to rent, is currently impounded on the site. It cannot get it back so is unable to return it to the hirer to at least defray some of the ongoing costs.

If Mr Lee and Mr Crisp can somehow get through this month and pay their bills, they will survive. It may be that they will have to forgo every last penny of profit from the first half of their contract, but if they can get into a position to be able to continue with the second half—I am delighted that the Government have indicated that they want people to be able to do that—they will at least remain in business. They may end up doing the whole project at cost, but at least they will be able leave the site this year in charge of a going concern and with an enhanced reputation as a contractor that has completed a professional job in difficult circumstances.

Mr Lee and Mr Crisp are not the moaning type, and they are not interested in retribution. They just want a bit of help to be able to carry on trading. I will be grateful if the Minister indicates what support could be provided, and I am grateful to those Ministers who have taken calls on Saturdays to help me with this problem.