The collapse of Carillion has prompted fierce criticism of the Government over its awarding of hundreds of contracts to the firm, with many business leaders warning of dire knock on effects to small firms in the fallen giant’s supply chain.
Simon Revington, analyst at City Index, said it was “more than surprising, possibly even negligent” that the UK government continued to dish out contracts to Carillion even though their future has looked uncertain for some time.
“Over £2 billion worth of government contracts were handed to Carillion during the time that the firm gave three profit warnings,” he said.
“As a result of the compulsory liquidation thousands of jobs as risk and potentially public services could be impacted. This is yet another huge embarrassment for the UK government, which appears to be moving from mishap to mishap.
“The very fact that Carillion have gone into liquidation rather than administration scream volumes over the state of the financials at the firm; there were no assets to sell so no administration.”
Keith Loudon, chairman at Yorkshire stockbroker Redmayne Bentley, said: “We never learn the age-old adage that says: ‘Don’t put all your eggs in one basket’!
“This is true for national and international businesses, local and national government organisations.
“One of the maxims of modern investing is ‘diversity.’”
Brian Berry, chief executive of the Federation of Master Builders, said: “Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise.”
Richard Piper, head of the construction team at Yorkshire law firm Gordons, said: “There is a suspicion that Carillion was under-pricing its services to win tenders, which although successful, can ultimately impact negatively on profitability.”