Carillion left up to £1.2bn in unpaid bills
The collapse of British services group Carillion started to hurt thousands of small contractors on Tuesday, with some laying off workers after the rapid demise of a company that was winning British state contracts as recently as November.
Rudi Klein, head of Britain's Specialist Engineering Contractors' Group, estimated that Carillion had left a trail of £1.2bn in unpaid bills to thousands of small subcontractors.
The 200-year-old company, swamped by debt and pension liabilities and losing cash, went into liquidation on Monday, threatening suppliers, merchants and big banks. The British government was forced to guarantee the provision of public services from school meals to road projects.
Examples of private companies that could be hit included a small Northern Irish engineering contractor owed £150,000 and a concrete frame manufacturer in north-west England owed £2m, Klein said.
Flora-tec, a corporate horticulture company based in Cambridgeshire, said it is owed more than £800,000 pounds for its work on Carillion contracts at local prisons, schools and hospitals.
"Last month, when we were knee-deep in snow, my guys were out at three in the morning putting salt down to make sure (facilities) were safe for people to use," managing director Andy Bradley told BBC radio.
"We're not going to get paid for that."
Britain began outsourcing public services in the late 1980s under Margaret Thatcher and the model expanded under Labour's Tony Blair and Gordon Brown. It is now the world's second-largest outsourcing market behind the United States.