05/02/2018 08:00 GMT

Carillion Collapse Could 'Trigger Even More Construction Firms Going Under', Report Warns

150,000 jobs to be created over next 5 years.

More than 2,600 construction companies became insolvent in the last financial year, with more facing problems because of the collapse of Carillion, according to a new report.

The number of firms going insolvent jumped by 8% in 2016-17 compared to the previous year, a study by accountants Moore Stephens found.

Carillion’s liquidation has put at risk the future of many other businesses in its supply chain as many will only receive a fraction of what they were owed, said the report.

Construction companies waited an average of 69 days for payment last year, up from 52 days five years earlier, said the report, adding that Carillion had come in for criticism over the extension of its standard payment terms to 120 days.

DANIEL SORABJI via Getty Images
Carillion’s liquidation has put at risk the future of many other businesses, a report has found

Lee Causer, of Moore Stephens, said construction consistently has the highest number of insolvencies of all industries in the UK, adding: “The fall of Carillion could be the trigger for even more construction companies going under.

“Carillion has left a huge number of subcontractors out of pocket, when they are already facing enormous financial pressures.

“Profit margins in construction are already very tight and late payment of subcontractors is now standard procedure for far too many in the sector.”

The Construction Industry Training Board (CITB) said over 150,000 jobs are set to be created in the industry over the next five years despite Carillion’s collapse and uncertainty over Brexit.

Over 15,000 carpenters and 9,300 labourers will be needed, as well as more mangers, as housebuilding increases, it was predicted.

CITB policy director Steve Radley said: “Despite all the gloom around Carillion and uncertainty from Brexit, our report’s message is that construction will continue to grow and create more jobs.