Senior minister defends government decision not to bail out Carillion

Wednesday, 17 Jan, 2018

In a statement the bodies said that according to its latest set of accounts, Carillion was holding over £800 million in retentions payments owed to sub-contractors.

A government spokesman has said: "HS2 is not at risk" and "will still be delivered".

He said the government would ensure that public services run by Carillion are operated in-house or given to other contractors, so that Carillion workers employed on such contracts have a good chance of keeping their jobs.

The government said it would pay the salaries of the company's public-sector workers, but private-sector contracts would only be paid for 48 hours after the collapse.

"And it was an opportunity for ministers just to test what is going on, what sort of concerns are being expressed and to decide how we should best address those and provide the reassurance people want".

Carillion plunged into compulsory liquidation on Monday, with £900m in debt and a £587m pension deficit, after failing to agree terms with its lenders.

Carillion, Britain's second biggest construction firm, had public sector or public/private partnership contracts worth £1.7bn, including school dinners, cleaning and catering at NHS hospitals.

A global presence, with 43,000 staff worldwide, it ran up £900 million of debt and nearly £600m of pensions deficit.

The new hospital under construction, alongside the present one
Senior minister defends government decision not to bail out Carillion

The bonuses were branded "exorbitant" in the Commons - one former cabinet minister likened the situation to a "British Enron", and Labour leader Jeremy Corbyn said the collapse was a "watershed moment" for privatisation.

The Conservative Party's Lewis declined to comment on whether ministers were ready to bail out the company, which Sky News had said could enter administration as soon as Monday unless the government backs a rescue plan.

"That these plans have worked well is a tribute to the tireless work by NHS staff and by staff employed by Carillion, who have put huge amounts of effort in at what is a very hard time for them".

I wrote to Carillion back in July past year to express concern after hearing from FSB members that the company was making small suppliers wait 120 days to be paid. They will head into work today not knowing if their wages, pensions and even their jobs are safe.

Rail, Maritime and Transport Union general secretary Mick Cash said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain".

The Financial Conduct Authority announced earlier this month that it had launched an investigation into the "timeliness and content" of announcements made by Carillion between December 7 2016 and July 10 2017.

Mr Lidington said the government had been preparing contingency measures since then and had only awarded work in the form of joint ventures, where other companies were "contractually bound to complete the work".