When Carillion went into compulsory liquidation at the beginning of 2018, it did so with liabilities of almost £7 billion. It was the largest corporate failure ever dealt with by the Official Receiver, costing the taxpayer more than £150 million.
That collapse led to around 3,000 redundancies in Carillion alone, and had a financial impact on some 30,000 suppliers, some of whom were themselves pushed into insolvency. More than 450 public sector projects including hospitals, schools and prisons were plunged into crisis.
Not only did the collapse of Carillion result in a Parliamentary enquiry, it also prompted legislation proposals to reform industry payment systems and good payment practices once and for all.
At the time, Unite’s assistant general secretary, Gail Cartmail, said: “The UK’s existing auditing and accounting system for major companies is clearly not fit for purpose and workers are suffering as a result.”
But, despite hopes that the Carillion debacle would be a tipping point for construction sector procurement and payment practices, precious little has seemingly changed.
And now there is a very real threat that this particular construction disease might be transmitted to the demolition sector.
As we reported last week, Squibb Group currently finds itself an eye-watering £23 million in the hole, hoping against hope that its supply chain will take pity upon it, play the long game, and accept a 65p in the pound payment arrangement.
Let me be clear. The scale of the Squibb black hole is loose change compared to that of Carillion. And, like most in the industry, I am hoping and praying the Squibb Group can step back from the edge of the precipice.
But, five years on from the biggest corporate failure in decades, we find ourselves once again asking how an entire supply chain are made aware of a perilous situation only when it is already upon it.
WWI was “the war to end all wars”, at least it was until another, bigger one came along 20 years later. The Carillion debacle, likewise, was supposed to mark a turning point and a new more transparent beginning. It clearly and demonstrably wasn’t.
Just how many more huge financial implosions will it take until we heed the lessons of the past?
This article was first published on Demolition Insider.