Taskforce of high street banks, trade bodies and businesses draw up measures to limit job losses as unions press government to act
High street banks have made more than £225m available to help businesses put at risk by the failure of Carillion, while companies have offered to take on staff who were working for the firm when it collapsed into receivership.
A taskforce of banks, businesses and construction industry trade bodies met with the business secretary on Thursday to discuss ways to contain the impact of Carillion’s collapse on jobs and the wider economy.
Greg Clark convened the meeting amid pressure from trade unions to ensure that the business world helps limit job losses among former Carillion staff and employees in its supply chain.
As the meeting broke up, banks announced more than £225m worth of emergency support to help small business customers ride out the crisis, including waivers on overdraft fees and loan repayment holidays.
Clark, who urged banks to provide support at a separate meeting held on Wednesday, said: “I welcome this quick and positive move by banks including Lloyds, HSBC and RBS. This follows my meeting with the banks yesterday where I challenged them to see what further support they could provide for SMEs affected by Carillion’s insolvency.
“It is essential that small businesses exposed are given the support they need by their lenders, and I look forward to other banks following suit.”
The lifeline comes after several of Carillion’s subcontractors began laying off staff, sparking fears for the survival of some of its estimated 30,000 suppliers, owed hundreds of millions of pounds between them.
Lloyds Banking Group, which was bailed out with £20bn of taxpayers’ money during the financial crisis, moved first to set up a £50m emergency fund to help affected businesses.
Royal Bank of Scotland, which required a £45.5bn bailout during the crash, offered £75m, while HSBC outgunned both with a £100m fund.
Santander UK also offered support but did not place a value on it, while a Barclays spokesperson said the bank would “look at” increasing overdrafts, reducing loan repayments and helping firms with cashflow problems.
Former clients of Carillion have also moved to take on some of its staff who were employed on contracts to provide services such as cleaning, catering and maintenance. British Gas owner Centrica, and Nationwide building society vowed to ensure former Carillion employees would continue to be paid or in some cases employed directly.
Meanwhile, banks and businesses took part in a meeting at the Department for Business, Energy and Industrial Strategy (BEIS) to discuss ways to contain the fallout from Carillion.
A BEIS spokesperson said: “We have created a taskforce to continue to support and monitor the impact on small businesses and employees who have been affected by Carillion’s insolvency.
“The taskforce will comprise representatives from business, construction trade associations, the trade unions, lenders and government.”
The Trades Union Congress, which has pushed for a crisis coalition of businesses and trade unions to deal with the Carillion fallout, said its general secretary, Frances O’Grady, would present demands designed to protect workers.
These will include: measures to transfer Carillion staff to new employers and protect their pay; bringing public sector contracts back under government control; a risk assessment of other large outsourcing firms and a moratorium on awarding further public service contracts to rival companies.
O’Grady said: “We are pleased the government has agreed to union calls for a national taskforce to deal with the collapse of Carillion.
“Time is of the essence in dealing with this crisis. We need urgent action to protect jobs, pay and pensions. This cannot be a talking shop.”
As the government stepped up efforts to limit the impact of Carillion’s collapse, several of the firm’s former clients said they would ensure staff continue to be paid.
Nationwide said it would directly employ 250 people who had been working for the company on a contract held by Carillion. A further 1,500 staff who were working for third-party subcontractors will now be contracted to Nationwide.
“Our contractors perform a vital and valued role for the society. During an unsettling time for Carillion employees we felt it was important to provide them with some reassurances,” said a spokesperson.
Centrica said it would make funds available to the government’s Insolvency Service to ensure that 480 staff who helped manage facilities at its buildings would continue to be paid.
National Grid, which used Carillion staff on its infrastructure programme, said work would continue on an overhead line between Richborough and Canterbury, which is designed to connect a Belgium-UK power cable to the grid, and a power cable at Wylfa in Wales for the planned new nuclear power station there.
A spokesperson said: “National Grid has contingency plans in place for all its projects with Carillion, using alternative suppliers if necessary. We believe that these plans mean we will be able to keep any disruption to a minimum.”
The company did not say whether it would take on any Carillion staff or whether it had provided funding to ensure they continue to be paid.