It’s difficult not to get angry with the government when you consider what is happening to businesses in this sector as a consequence of Carillion’s collapse. Just last week Vaughan Engineering Services, a relatively small Northern Irish-based M&E contractor, signalled that an arm of its business in England and Scotland is on the brink of administration with the threat of 160 jobs being lost. And they’re not alone. Companies large and small are suffering in silence fearful of spooking their clients and suppliers and talking themselves into a hole.
“This is devastating news for all of the people who work for Vaughan Engineering,” finance director Gavin Vaughan said before explaining that he had asked the government, Scottish Enterprise, MPs and many different authorities for help before getting to this point. But help hasn’t been forthcoming and the company is now where it is.
Much was made of a possible government or banking bailout of Carillion before it went under. ‘Too big to fail,’ they said. ‘The government is too invested.’ But it still went under
Vaughan’s chief complaint is that there are schemes for very small businesses to help with cash-flow and duress but once you’re over a certain revenue threshold, you’re on your own. The situation is even more galling as every week the government’s business secretary Greg Clark (or a member of his team) meets with construction industry leaders as part of a post-Carillion collapse taskforce. It makes you wonder what they’re talking about? Perhaps it’s the 123 further employees of Carillion who are also now facing the dole queue as the company’s liquidation process drags on. Or the handsome share-related bonuses offered to former CEO Richard Howson? Either way, it’s not helping poor old Vaughan Engineering Ltd or the many more like them. And the fear is that it’s going to get worse. The government may have had a word in the ear of some of its banking chums in a bid to go easy on the repayments of the businesses impacted.
But once the publicity fades, we’re likely to see a reversal and many more firms going to the wall as any cash reserves they put aside for a rainy day begin to dry up and the attitudes of the banks revert to business as usual. Much was made of a possible government or banking bailout of Carillion before it went under. “Too big to fail,” they said. “The government is too invested.” But it still went under. And now the government is standing by as many more companies fail and jobs are lost. All this is happening while the likes of PwC rake in millions of pounds in fees to clean up the mess Carillion has left behind. You can begin to see why the Jeremy Corbyn campaign is gathering momentum in bar rooms across the land. What is happening is anything but economic competency, it’s more economic stupidity. As Gavin Vaughan puts it: “It is especially painful for all of us involved in this to know that none of it is our fault. We did the work we were commissioned to do, to our usual extremely high standard and as usual we completed it on time and to budget, yet this is the result.”
So surely now is the time for the government to step in and to ensure that there is not the same result for many countless others. It’s simply not right.
Tom Broughton, editor-in-chief, Building