Major government contractor Carillion forced into liquidation

Posted On: 
15th January 2018

Debt-ridden construction firm Carillion has announced it is going into compulsory liquidation after last-ditch attempts to save the company failed. 

Construction and outsourcing firm Carillion appears close to collapse

Administrators will now be called in to oversee dividing up the firm's assets. 

Labour's shadow Cabinet Office minister Jon Trickett urged the Government to set out its contingency plans, including guaranteeing public sector contracts where necessary.

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Bernard Jenkin, chair of the Public Administration and Constitutional Affairs Committee, announced they would be carrying out inquiry into the collapse of the company this afternoon.

Ministers are also facing questions about why the Government awarded Carillion lucrative contracts even after it had issued profit warnings. 

The company, which employs 20,000 people in the UK, had debts totalling around £1.5bn and a shortfall of almost £600m in its pension fund. 

It relied heavily on income from government contracts ranging from large-scale rail projects to managing prisons and providing school meals. 

The firm's key creditors were due to meet Whitehall officials today to discuss possible government intervention, but have now pulled the plug. 

Transport Secretary Chris Grayling may yet face questions over why he awarded Carillion a contract for work on the HS2 project a week after the company had issued a profit warning. 

There is also anger that departed chief executive Richard Howson will continue to receive his £660,000 salary for a year after he leaves. 

The Tory chair of the Public Administration Committee, Bernard Jenkin, said he was minded to launch an inquiry into how the Government procures services.

"We would want to look at Carillion's relationship with Whitehall, as a test case," he said.

"We have long been interested in projects and contracts which are 'too big to fail' and how Whitehall and the private sector must improve how they work together."