NETWORK RAIL has taken action to ease the plight of hundreds of companies which are owed money by the collapsed engineering firm Carillion.

However, although payments will be made directly by Network Rail to about 300 smaller suppliers, these will not help larger sub-contractors. Network Rail said ways of helping them will 'continue to be explored'.

The payments of arrears are the result of an agreement between Network Rail and accountancy firm PwC, which has been instructed to manage Carillion’s affairs by the Official Receiver. The payments will cover the period between Christmas and 15 January, when Carillion went into liquidation.

The collapse of the firm, which had reportedly been Network Rail’s second largest contractor, has put 20,000 jobs at risk in Britain alone, plus more in other countries.

All certified work carried out since 15 January by former Carillion sub-contractors for Network Rail is already covered, and Carillion rail employees will also be paid ‘until at least mid-April’.

Network Rail commercial director Matthew Steele said: "We recognise how challenging this period has been for our small suppliers. We hope that this will be some positive news to the hundreds of smaller companies up and down the country who have been worried about the impact on their business. These small organisations are a critical part of our supply chain both now and in the future.

"PwC, together with our in-house task force and the Carillion teams, are carefully managing this difficult period to keep all our rail projects going, and are working hand-in-glove to find ways to support staff and suppliers alike."