What you need to know about Carillion's collapse

17 January, 2018, 02:04 | Author: Dustin Murphy
  • Stanton Territorial Hospital

Britain's government refused to rescue Carillion, saying it could not be expected to bail out a private company.

Rail, Maritime and Transport union general secretary Mick Cash said: "The blame for this lies squarely with the Government who are obsessed with outsourcing key works to these high-risk private enterprises".

Yesterday, in the face of costly contract delays and a recent drought in new business, British construction giant Carillion went belly up.

"In particular, I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors".

According to Carillion's last annual report and accounts, for the year 2016, the company had assets of £2.57 billion and liabilities of £3.37 billion, leaving a pensions deficit of approximately £800 million before deferred taxation.

Mr Lidington also said the 11,000 Carillion staff working on Government contracts will be paid. "Any evidence of misconduct will be taken very seriously".

Opposition leader Jeremy Corbyn has called the collapse a "watershed moment" and argued that it is time to end "rip off privatisation".

Steve Webb, director of policy at investment group Royal London, said Carillion's employees will "understandably be devastated" at the collapse of the firm but urged them to take heart that the PPF was financially fit and able to help.

"Carillion is the latest company to struggle under the weight of pension debt as defined benefit pensions have turned out to be far more expensive than most could ever have imagined", the pensions expert said.


Flora-tec, a corporate horticulture company based in Cambridgeshire, eastern England, said it is owed nearly 1 million pounds for its work on Carillion contracts at local prisons, schools and hospitals, and had to lay off 10 of its 90 staff. The government has said it will take over those contracts and cover some of the liquidation costs.

"Our employees, subcontractors and suppliers in Canada continue to be paid and we remain committed to delivering safe, quality services for our clients".

"There should be no equivocation from the Government and no attempt to duck and dive around this issue".

"Workers can't be left at the back of the queue".

"They will of course still be expected to pay any outstanding labour or materials costs for the work they have incurred or purchased and make Value-Added Tax payments due to the crown authorities which may in some cases include their invoices to Carillion". They have bills and mortgages to pay, and deserve certainty on their future.

Carillion has public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence. Carillion's share price has plunged 70 per cent in the last six months. Infographic from PA Graphics.

"Government, even despite several profit warnings, continued to give Carillion large public sector contracts (.) and the message that sends to businesses like mine, the small guys in the supply chain, is that central government must have confidence in Carillion", he said.

Since then, the company has cleared out its executive team, including chief executive Richard Howson and finance director Zafar Khan.

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