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THE downfall of Carillion takes a lot of unfortunates with it.
Cabinet Office Minister David Lidington confirms that the government will only provide support for businesses working on private-sector deals for 48 hours.
Firms enmeshed in the collapsing giant’s supply chain will be back of the queue for payment they are owed — meaning misery for hundreds of small businesses and redundancy for those who work for them.
This is likely to be exacerbated, Federation of Small Businesses chief Mike Cherry points out, because Carillion extended its payment schedule last year, making suppliers wait longer to be paid for the work they do.
“Unpaid bills may go back several months,” he tells the BBC, noting that he wrote to the corporation in the summer after finding some suppliers were being made to wait up to 120 days for payment.
This is a common trick. In his address to the federation back in April, Labour leader Jeremy Corbyn pointed out that small businesses across Britain were owed £26 billion in late payments.
Decades of government of the rich, by the rich, for the rich, beginning in the Thatcher years and continuing under Major, Blair, Cameron and May, have skewed the rules of our economy so the biggest companies can evade the responsibilities that smaller operations have to live with.
Small, independent landscapers or caterers providing services for Carillion would be taken to the cleaners if they were late with their tax — yet big fish like Vodafone can not only avoid it on a colossal scale, but also agree sweetheart deals with HM Revenue and Customs when they get caught out, effectively writing off billions in unpaid taxes.
In a similar way, big companies use their muscle to lord it over small suppliers, manipulating payments schedules to keep their bank balances fat and profiting from the resulting interest.
“Cash is king for any business and big companies are managing their cash by borrowing — interest free — from their suppliers,” Corbyn pointed out.
“Some of the biggest names in business are holding huge cash piles that don’t actually belong to them.”
Conservative ministers might mouth regret at such underhand behaviour, but finally we have a Labour Party that not only foresaw the risk to small businesses and their employees posed by giants like Carillion but has already pledged specific policies to tackle it and a range of other scandalous abuses.
Government could refuse to commission contractors if they do not pay suppliers within 30 days, Corbyn suggested, while binding arbitration and fines for late payers could be used to bring the private sector to heel.
At the same time, it would be unfair to the public to expect us to bail out every failed private company as we did the banks — but a tightening of employment law as proposed by Chris Stephens’s Workers’ Recognition and Rights Bill would do much to ensure that working people can claim wages they are owed if an employer goes bust or absconds.
What it would not do, of course, is end the lottery of the capitalist system itself, where people can be thrown out of work because of decisions and considerations that have nothing to do with them.
In Francis Spufford’s novel Red Plenty, a character derides the capitalist “zombie dance” between people and commodities, “a grim cavorting whirl in which people and objects blended together until the objects were half alive and the people were half dead,” which sees “stock-market prices act back upon the world as if they were independent powers, requiring factories to be closed or opened, real human beings to work or rest.”
Until we build a society which places human needs above those of the all-powerful “market,” we will continue to see people who have done nothing wrong lose jobs, homes and livelihoods. This crazy set-up has to be brought to an end.
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