Banks offer small business support after Carillion, but is it enough?

Monday 22 January 2018

The collapse of Carillion has been a major issue for contractors throughout the UK, as small businesses are faced with the prospect of not getting paid for the work they have performed for the firm. As a result, a group of banks has met with several government ministers to offer support for the affected SMEs.

Business secretary Greg Clark, economic secretary to the treasury John Glen and small business minister Andrew Griffiths met with representatives from banks - including Barclays, HSBC, Lloyds, RBS and Santander - on Wednesday (January 17th) to discuss what could be done for small businesses affected by Carillion's liquidation.

Among the emergency measures being put in place for contractors are overdraft extensions, payment holidays and fee waivers, to help them financially in the short term. HMRC has also announced support for those affected, with small businesses being able to agree instalment arrangements if the Carillion collapse has left them unable to pay their tax on time.

All of these measures will be welcome to any contractor affected, giving them respite from immediate financial worries. However, some key organisations are pointing out that this should be the first step in a wider plan to help small businesses.

For example, Federation of Small Businesses (FSB) national chairman Mike Cherry said: "We now need to establish a Carillion task force dedicated to helping all affected small firms and workers to recover and get back on their feet." A similar step was taken after the collapse of Rover in 2005, which provided support for the company's suppliers.

"Providing small businesses and the self-employed with more opportunities to secure public contracts will mean less risk and better return for the taxpayer," added Mr Cherry. "At the very least we need to see the reinstatement of the target date for achieving 33 per cent of all public sector procurement with smaller businesses, to 2020."

With 800,000 self-employed people working in the UK construction industry, it's crucial that the government - alongside banks and other financial institutions - makes every effort to support contractors throughout this trying time.

However, Tom Purvis - political and economic advisor for the Association of Independent Professionals and the Self-Employed (IPSE) - points out that there is a "silver lining" to this situation for contractors; he said: "The UK’s flexible labour market should hopefully open up more opportunities for these highly skilled people."

If you have been affected by Carillion's liquidation and are in need of financial advice, why not contact Brookson? We are a specialist contractor accountant, so we are well-informed about the specific details of self-employment that other professionals might struggle with.

By Victoria McDonnell

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