Carillion collapse: Ministers hold emergency meeting

Carillion workers on Midland Metropolitan HospitalImage copyright
Reuters

Cabinet ministers have concluded a crisis meeting about keeping vital public services going after the collapse of contractor Carillion.

The construction giant, which provides services for schools, prisons in addition to hospitals, has gone into liquidation.

Cabinet Office minister David Lidington said the two-hour Cobra committee talks enabled ministers to air any concerns.

Meanwhile, Labour leader Jeremy Corbyn attacked government policies in addition to called Carillion a “watershed moment”.

In a video released on social media, he said: “inside wake of the collapse of the contractor Carillion, This specific will be time to put an end to the rip-off privatisation policies that will have done serious damage to our public services in addition to fleeced the public of billions of pounds.”

Carillion ran into trouble after losing money on big public sector contracts in addition to running up huge debts of around £1.5bn.

The government will be stepping in to pay employees in addition to little businesses working on Carillion’s public contracts in addition to assess the distribution of contracts among various other companies.

After the Cobra meeting, Mr Lidington said that will day one had gone “pretty well” as “people were turning up to work [in addition to] we have not had any reports of serious interruption to service delivery.”

He said that will accountancy firm PWC, which will help sell off Carillion’s assets, took ministers through the advice This specific will be giving to employees in addition to contractors at the meeting.

This specific was also an “opportunity for ministers to test what sort of concerns are being expressed in addition to decide how we should best address them in addition to provide the reassurance that will people want”, Mr Lidington added.

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Media captionDavid Lidington says wages will be paid to staff working on public sector contracts

“The action we have taken will be designed to keep vital public services running rather than to provide a bailout on the failure of a commercial company,” Mr Lidington told parliament.

Carillion, the UK’s second biggest construction firm, was also involved in major projects such as the HS2 high-speed rail line.

The firm has 450 government contracts, including maintenance for prisons in addition to hospitals, as well as dinners in addition to cleaning for hundreds of schools.

This specific will be also the second biggest supplier of maintenance services to Network Rail, in addition to This specific maintains 50,000 homes for the Ministry of Defence.

The government has disclosed that will This specific awarded eight contracts to the company after This specific issued profit warnings – six of which were joint ventures with various other firms.

In his video message, Mr Corbyn linked the crisis to the outsourcing of public services to private companies.

“Across the public sector, the outsource-first dogma has wreaked havoc,” the Labour leader said.

“Often This specific will be the same companies that will have gone by service to service, creaming off profits in addition to failing to deliver the quality of service our people deserve.”

Carillion has 43,000 staff worldwide, including 20,000 inside UK.

There are also thousands of little firms that will carry out work on Carillion’s behalf – many of those have contacted the BBC with concerns about whether they will be paid.

One company, which provided services for Carillion’s prisons contract, told the BBC that will This specific might fail if This specific will be not paid the £80,000 owed to This specific.

A worker on the completely new Midland Metropolitan Hospital building, who wanted to only be identified as Philip, told the BBC: “Everyone on the site got told: ‘that will’s This specific, go home.’ My company said, ‘You’ve been laid off.’

“They’ve literally locked the gate. They’ve told us we can get our personal tools off the site if they’re little, however that will’s This specific.”

What happens next depends on the actions of a court-appointed official receiver. With the help of a team of experts by accountants PwC, the receiver will review Carillion’s business – a process which could take months.

The government could take some public services in-house, while various other firms may take on some of Carillion’s various other contracts.

Pension impact

Thousands of current in addition to former staff have money in Carillion pension funds, which have a total deficit of almost £600m.

Those funds will at This specific point be managed by the Pension Protection Fund (PPF).

The PPF said: “We want to reassure members of Carillion’s defined benefit pension schemes that will their benefits are protected by the PPF.”

Carillion might not be a household name, however over time This specific has absorbed better-known businesses, including Mowlem in addition to Alfred McAlpine.

This specific also incorporates a big international business, including a huge construction project in Qatar related to the 2022 FIFA World Cup.

In addition This specific will be a big supplier of construction services to the Canadian government.

Its biggest problems were cost overruns on three UK public sector construction projects:

  • The £350m Midland Metropolitan Hospital in Sandwell: opening delayed to 2019 due to construction problems
  • The £335m Royal Liverpool Hospital: completion date repeatedly pushed back amid reports of cracks inside building
  • The £745m Aberdeen bypass: delayed because of slow progress in completing initial earthworks

Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, said Carillion’s collapse “definitely shakes public confidence inside ability of the private sector to deliver public services in addition to infrastructure”.

His committee will be launching an inquiry into government outsourcing following the demise of Carillion.


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