Avenue Bank has provided more than 225 million pounds to help businesses face the risk of Carillion’s failure, and companies have proposed taking over employees who work for the company.
A working group of banking, business and construction trade agencies met with business secretary on Thursday to discuss ways to curb the impact of Carillion’s bankruptcy on jobs and the broader economy.
After the meeting, the bank announced more than 225 million pounds of emergency assistance to help small business customers through the crisis, including the elimination of overdraft fees and loan repayments.
Clarke urged banks to provide support at another meeting on Wednesday, saying: “I welcome this fast and aggressive move from banks including Lloyds Bank, HSBC and Royal Bank of Scotland. Bank meeting where I challenged them to see if they could provide further support to SMEs affected by the bankruptcy of Carillion.
“Small businesses have to get lender support and I hope other banks can keep up.”
Several subcontractors at Carillion started laying off workers, raising concerns about the estimated 30,000 subsistence providers that owed hundreds of millions of pounds between suppliers.
Lloyds Banking Group, which received ￡ 20 billion in taxpayer financial aid during the financial crisis, first set up a ￡ 50 million contingency fund to help affected businesses.
Royal Bank of Scotland needed 45.5 billion pounds in the accident rescue, providing 75 million pounds, while HSBC is spending 100 million pounds of funds.
The Bank of Santander also provided support but did not make any estimates, while a Barclays spokesman said the bank would “look” at companies that increased overdrafts, reduced repayments and helped cash flow problems.
Carillion’s former clients have also turned to hire employees to provide services such as cleaning, catering and maintenance. British gas owners Centrica and the National Building Council vowed to ensure former Carillion employees will continue to be paid or, in some cases, directly employed.
In the meantime, banks and businesses participated in a meeting of the Department of Business, Energy and Industrial Strategy (BEIS) to discuss ways to curb the impact of Carillion.
A BEIS spokesman said: “We have set up a working group to continue supporting and overseeing the small businesses and employees affected by the bankruptcy of Carillion.
Union Union Congress to promote the crisis union formed by enterprises and trade unions to deal with the consequences of Carillion, its general secretary Frances O’Grady will put forward requirements aimed at protecting workers.
These include measures to transfer Carillion employees to new employers and protect their salaries; resetting public sector contracts to government control; conducting risk assessments of other large outsourced companies and suspending further public service offerings to rival companies contract.
O’Grady said: “We are very happy that the government has agreed to the coalition’s call for the establishment of a national working group to deal with the collapse of Carillion.
“The time to deal with this crisis is crucial, and we need urgent action to protect jobs, wages and pensions, which can not be a talking shop.”
As the government stepped up its efforts to limit the impact of the collapse of Carillion, several of its former clients said they would ensure that employees continue to receive remuneration.
Nationwide said it will directly hire 250 companies that previously worked on contracts held by Cari llion. An additional 1,500 staff working for third-party subcontractors will now be contracted to the country.
“Our contractors play a vital role in society and we feel it is important that Cari llion employees feel uneasy when it comes to providing them with some assurance,” a spokesman said.
State Grid’s staff using Carillion in its infrastructure project said the work will continue on the overhead line between Richborough and Canterbury to connect the Belgian-British power cable to the grid and to work in Wylfa, Wales Power Cable plans to establish a new nuclear power plant there.
A spokesman said: “SGCC has developed contingency plans for all Carillion projects and, if necessary, alternative suppliers, and we believe these plans mean we will be able to minimize disruption.”
The company did not say whether it would take any Carillion employees or whether it has provided funding to ensure they continue to be paid.