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13 December 2018

Interserve must not become another Carillion, warn small firms

Responding to the announcement of a debt restructuring at Interserve, which was awarded a £25 million contact for work on the Prince Charles Hospital in Merthyr on Tuesday, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said:

“Interserve must not become another Carillion. The demise of the construction giant almost 12 months ago led to the collapse of many of its small suppliers, causing shockwaves throughout the industry which are still being felt.

“In a worst-case scenario, Interserve’s suppliers must be protected. The outsourcing giant has provided reassurances that this will be the case. It’s one of only five strategic suppliers to the government with a ‘living will’: mapping all of the key contracts it has place, outlining exactly who it owes and by when. This important measure should enable contracts to be seamlessly passed on if the worst does occur.

“We now need to see reassurances that payment terms for Interserve suppliers will not be lengthened and invoices will not be unnecessarily disputed in order to delay payments.  

“A fifth of all government procurement spending is with suppliers that receive more than £100 million in revenue from public bodies, up from around an eighth five years ago. Post-Carillion, lessons need to be learnt. More small and mid-sized firms must be brought into the procurement fold.”