Efforts by the government to reassure thousands of staff employed by Carillion to work for private sector clients were called “flimsy”, as the small businesses owed money by the failed company braced for losses.

The prime minister’s spokesman said most of the companies that were using Carillion’s 8,500-strong private sector workforce have agreed to provide funding to continue paying them.

But trade unions warned the promise would not provide sufficient reassurance and voiced fears that Carillion’s financial failure would spread further among suppliers, some of which have begun laying off staff.

As the government grappled with the fallout from Carillion’s collapse:

Banks and HM Revenue & Customs vowed to assist affected firms.



Carillion’s former boss quit a £60,000-a-year job at another company.

Directors’ bonuses and salaries were stopped.

Government monitoring of Carillion was criticised.

The Insolvency Service, which is sifting through Carillion’s contracts in an effort to limit disruption, said 90% of firms contacted have agreed to “provide funding” to ensure the services such as cleaning and maintenance continue.

“Over the past 48 hours all of the company’s private sector service customers have been contacted to determine their ongoing needs,” the Insolvency Service said.

“The Official Receiver is very pleased with the level of support shown by Carillion’s private sector service customers. Work has paused on construction sites, pending decisions as to how and if they will be restarted.”

Some 10% of Carillion’s list of private sector customers, which include Nationwide and National Grid, have yet to make such a commitment.

The GMB trade union said the statement from the Insolvency Service “raises more questions than it answers”.

“Ensuring most workers get paid beyond today doesn’t go nearly far enough to give the reassurance our members need right now,” said general secretary Tim Roache. “We need proper guarantees that they will not be left in the lurch and unable to pay the bills within days due to a crisis they did not cause. Without assurances as to how long wages are secure for and who will be running these contracts given the company’s spectacular failure, this is not going to help Carillion workers sleep easier tonight.”

Britain’s biggest trade union Unite warned that thousands of staff at Carillion’s estimated 30,000 supplier and subcontractor companies were also at risk.

Unite assistant general secretary Gail Cartmail said: “The government has a moral duty to provide direct financial assistance as well as other support in order to ensure that subcontractors and suppliers don’t needlessly go to the wall, with thousands of workers potentially losing their jobs.”

Business secretary Greg Clarkmet banks on Wednesday morning, asking them to provide additional financial support.

“SMEs are not responsible for the collapse of Carillion and banks should bear that in mind,” the prime minister’s spokesman said.

HMRC and the banking industry both promised extra time to make tax and loan repayments.

UK Finance, the trade body that represents banks, said the industry was ready to offer “emergency measures”. HMRC offered affected companies the chance to pay by instalment, defer payment, and avoid penalties for missing tax deadlines.

As the prime minister fielded questions in parliament about the crisis, the government faced criticism over its dealings with Carillion.

Court documents filed as part of the firm’s liquidation show many of its customers were abandoning the company even as the government continued to award it contracts.

Wolverhampton-based Carillion began weekly reporting on its financial position to government from the autumn, several months after its July profits warning.

A witness statement from interim chief executive Keith Cochrane said the company subsequently won “significant new contracts, including with [the government] at a time when certain long-standing customers informed the company that they would not place new work until its balance sheet issues were resolved”.

Carillion announced the award of eight public sector contracts after the July warning, including joint venture arrangements to build parts of the HS2 line.

Transport secretary Chris Grayling told ITV there was “no legal basis for excluding a consortium of companies that have done nothing wrong” and that due diligence had been carried out.

But Jon Trickett, Labour’s shadow minister for the Cabinet Office, accused ministers of ignoring warning signs: “Many other businesses, including longstanding customers stopped supporting Carillion because of the state of its finances.

“Yet the government continued to hand them major contracts whilst failing to monitor them properly until it was too late.”

The Cabinet Office has pointed to the fact that many of these contracts were joint ventures with partner firms who could step in to pick up the work.

The document also shows that Carillion hoped “that HMG would provide support to the company to mitigate and help managed the challenges it faced”.

But the end came a week after Carillion asked ministers for a bailout on 8 January of about £20m.

Ministers refused the request at a meeting on Sunday, forcing it to enter liquidation the following day.

The Cabinet Office said directors who were in charge when Carillion collapsed are no longer receiving salaries or bonuses, including severance payments due to executives who have left.

The government has asked the Insolvency Service to fast-track an investigation into the conduct of the directors.

Former chief executive Richard Howson, who quit in July after the firm first revealed it was in financial difficulty, has stepped down from a £60,000-a-year job with oil services company John Wood Group.

Shadow work and pension secretary Debbie Abrahams said she had written to her opposite number, Esther McVey, to ask for more detail on plans to deal with Carillion’s retirement scheme, which has a £590m deficit.

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• This article was amended on 18 January 2018 to remove a suggestion that British Gas was in the 10% of Carillion’s private sector customers which had yet to make a commitment to the Insolvency Administrator.