January 16, 2018 / 5:11 PM / 4 months ago

Supplier facing 1 million-pound hit from Carillion collapse, lays off workers

CAMBRIDGE, England (Reuters) - A Cambridgeshire horticulture firm has laid off 10 workers since Monday after facing nearly 1 million pounds in unpaid bills from the collapse of outsourcer Carillion (CLLN.L), a company it viewed as sound because it was endorsed by the government.

Flora-tec, which provides landscaping and ground maintenance, worked on Carillion contracts from its base in Hinton, Cambridgeshire, eastern England.

“We employed 90 people yesterday, we’ve got 80 people today,” Managing Director Andy Bradley told Reuters.

“People were in tears, colleagues we worked with for a long time. But as soon as we knew what happened we had to cut our cost base.”

The British government has faced questions as to why it continued to award Carillion contracts, for key public services ranging from school dinners to building roads and railways, after it first signaled it was in financial difficulty in July last year.

Just a week after that first warning, Carillion was named as one of the contractors on Britain’s new High Speed 2 rail line, a flagship project that will better connect London with the north of England. In November, it won a further two contracts with state-owned Network Rail.

    Bradley said the government had actively encouraged small businesses to get involved in public sector contracts “to make sure the little guy got a slice of the pie”.

    “I feel that we’ve been misled,” he said.

    “The actions of the government, whatever the intentions were, have meant that we mistakenly had far more confidence in Carillion’s ability to trade than perhaps we should have done.”

    He said the government should think long and hard about the impact of Carillion’s collapse on small and medium-sized suppliers.

    “We are the people that will bear the brunt of this, not the shareholders and not the big multinational conglomerates,” he said.

    Reporting by Alex Fraser, Writing by Paul Sandle; editing by Stephen Addison

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