Work on construction sites run by failed building firm Carillion is to pause while decisions on their future are made, says the Insolvency Service.
But work on most of Carillion’s private sector service contracts, such as catering and cleaning, is to carry on until new suppliers can be found.
Carillion’s customers want to continue with existing services and will provide funding to retain staff for the moment.
Meanwhile, payments to Carillion directors have been stopped.
The Insolvency Service also confirmed that severance payouts to former executives would not be made.
Several former executives would have received pay and benefits this year.
- Carillion had agreed to keep paying former chief executive Richard Howson a £660,000 salary and £28,000 in benefits until October as part of his departure deal.
- Former finance chief Zafar Khan, who left Carillion in September, was due to receive £425,000 in base salary for 12 months
- Interim chief executive Keith Cochrane was due to be paid his £750,000 salary until July, despite leaving the company in February.
On Monday, Carillion went into liquidation, putting thousands of jobs at risk.
In response, Business Secretary Greg Clark met representatives of some High Street banks to seek assurances that they will support small businesses affected by the Carillion crisis.
“I will continue to meet with them in the days and weeks ahead to ensure these commitments are being acted on,” he said.
- Carillion was left with just £29m before going bankrupt
- ‘Sites are silent and virtually deserted’
- Carillion apprentices among casualties
- Carillion not alone in hitting problems
The collapse of Carillion was discussed during Prime Minister’s Questions.
Labour leader Jeremy Corbyn accused the government of negligence, saying it awarded contracts to Carillion even when it became clear the company had problems.
He also called on the government to end the “costly racket” of private sector firms running public services.
Prime Minister Theresa May said a third of government contracts with Carillion were agreed by the previous Labour administration, adding she wants to provide “good quality public services, delivered at best value to the taxpayer”.
- Prime Minister’s Questions: The key bits and the verdict
Earlier GMB union boss Tim Roache had said the government’s response to the Carillion crisis had been “inadequate and inept”.
Mr Roache said that his union had called on Business Secretary Greg Clark to set up a task force to help private sector companies and employees affected by Carillion’s collapse.
He called on other private sector companies to take on affected workers without a change in their terms and conditions – a process that he admitted would not be a short one.
Are you affected by the collapse of Carillion? Email.
‘It’s been an ongoing battle to get paid’
Shaun Weeks runs the cleaning firm Paragon Services. He told BBC 5 live Breakfast they had withdrawn the cleaner they had working full-time in a local prison.
“We’d been chasing them for money, we hadn’t been paid since July and when we heard the rumours about a week-and-a-half ago that Carillion were in a lot of trouble, we really pressed.
“Fortunately for ourselves, we did actually get paid the money that was owed to us for the work that she’d done between August and November.
“We’ve pulled our cleaner out at the moment and we’re just still waiting to hear from them what’s happening next before we send her back in again.
“It looks like we are going to lose the December invoice money that we’ve sent them and obviously the first two weeks of January.
“It’s been an ongoing battle since we’ve been in there to get paid and we’re not prepared to take the risk while they’re in liquidation.
“Until we see something in black and white saying that, ‘Yes, you will get paid on these set terms,’ then we will consider sending our cleaner back in again.”
Carillion went into liquidation on Monday after rescue talks with its lenders and the government failed to reach a deal.
The UK’s second-biggest construction company ran into trouble after losing money on big contracts and running up huge debts of around £1.5bn.
The company employed 43,000 people worldwide, 20,000 in the UK, and the government has said staff and contractors working on public sector contracts will continue to be paid.
But 30,000 smaller firms which have been working on Carillion projects in the private sector face an uncertain future and are waiting to learn whether they will be able to get hold of money owed to them.
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