But larger firms still waiting to find out if they’ll get paid

0910 ab carillion rail glasgow article wide

Network Rail has said it will pay hundreds of Carillion subcontractors for work they carried out on the network over the Christmas period.

The network operator has said around 300 firms will be paid for work they carried out on the railway from 23 December  through to 15 January – the date when Carillion went bust.

A Network Rail spokesperson said the maximum payment to each firm would be limited to £50,000 but added that it would clear “all the arrears of SMEs owed £50k or less which accounts for the ‘bills’ of two-thirds of Carillion’s rail supply chain”.

Most of the arrears had built up during the Christmas and New Year period, although some date back to early December and beyond.

The Christmas and New Year period traditionally sees dozens of upgrade jobs take place on the railway as Network Rail takes advantage of fewer people using trains.

Network Rail said payments will start being made today which it said will take a number of working days to process.

It was also confirmed it was talking to PwC about money owed to bigger rail suppliers and how they could be dealt with.

Yesterday, piling specialist Van Elle said it was preparing to write off the £1.6m it was owed by Carillion for work carried out after 31 October last year as bad debt.

Matthew Steele, commercial director at Network Rail, said: “We recognise how challenging this period has been for our small suppliers.

“We hope that this will be some positive news to the hundreds of smaller companies up and down the country who have been worried about the impact on their business. These small organisations are a critical part of our supply chain both now and in the future.

But some firms are still expected to be substantially out of pocket because of Carillion’s 120 day payment terms.

This news comes a week after the announcement that all suppliers on rail projects would be paid from 15 January until further notice and that Carillion rail employees would be paid until at least mid-April.

It was also confirmed that Carillion employees working on jobs for Network Rail had been told their wages will be paid for at least another three months.

Carillion continued to win Network Rail deals as its financial situation worsened, landing a £260m contract for the Midland Mainline Electrification programme as recently as November.