The collapse of Carillion – the UK’s second-largest construction firm – into liquidation in January was a huge shock to the whole building industry. Since then the repercussions of its downfall have been rippling through its suppliers, partners and clients, prompting lay-offs and chaos on unfinished sites. The head of the Insolvency Service, Sarah Albon, has said the estimated 30,000 firms thought to be owed a combined total of over £1bn stand little chance of seeing any of that back, while listed contractors such as Balfour Beatty and Galliford Try have had to write off £44m and £25m respectively to pick up the pieces on the troubled Aberdeen Western Peripheral Route contract. (Galliford Try has since had to complete a rights issue of more than £150m to cover spiralling costs on the project.)

However, as well as these direct repercussions, in the latest results from construction firms it is possible to pick up evidence that the collapse of the £5bn construction giant is having an even wider impact, affecting new orders coming into the sector. Last month materials firm Polypipe went public, saying the demise of Carillion was potentially leading to “further project delays as main contracts are renegotiated and the impact on subcontractors works through the market”. 

Alastair Stewart, analyst at Stockdale Securities, says the reality is more serious still: “The market’s undergone a serious hiatus since Carillion folded, with a range of major contractors reporting marked delays in contracts being signed off. Everyone’s going through massive due diligence and contracts aren’t getting signed.” 

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