Tag Archive for: Carillion

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Inquiry into the collapse of Carillion

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This week marks the start of a two-part inquiry into Carillion’s collapse after a joint inquiry was launched by the business and the work and pensions select committees. 

MPs are keen to find answers about what role senior executives played in the firm’s downfall. The committees will hear from Robin Ellison, chairman of trustees of Carillion’s pension scheme and next week, Carillion’s former chief executive Richard Howson and chairman Phillip Green will be summoned, along with a host of finance directors.

New research has shown the firm was the main contractor on 57 construction projects worth a total of £5.7bn on the day it liquidated.

The information comes from construction industry analysts Barbour ABI who have accounted for major projects such as Royal Liverpool Hospital and an army basing programme in Salisbury worth £450m and £340m respectively. The two schemes which remain in limbo are two of ten projects which are worth more than £150m. The figures also account for the £1.3bn HS2 contract.

Analysts say Carillion were also involved in 16 framework contracts as part of a list of companies pre-selected or pre-qualified to undertake works for an organisation.

These framework contracts are not included as part of the final 57 projects as there is no guarantee that they had won any work from the framework.

Commenting on these findings, Michael Dall, lead economist at Barbour ABI, said: “Carillion were deeply embedded within the construction industry – they were the second biggest contractor in the UK by revenue. Our records show that they were the main contractor on almost 60 schemes worth a total value of £5.7bn. That is not to mention the plethora of other contracts where they were carrying out other construction roles.”

Yesterday, a further 452 jobs were lost as a result of the collapse of the company, the losses were on top of 377 announced on Friday.

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Lessons to be learned from Carillion collapse

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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 and hospitals, has gone into liquidation.

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

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

The government is stepping in to pay employees and small businesses working on Carillion’s public contracts and assess the distribution of contracts among other companies.

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 and hospitals, as well as dinners and cleaning for hundreds of schools.

It is also the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.

Carillion has 43,000 staff worldwide, including 20,000 in the UK.

According to the Federation of Master Builders (FMB) the Government must learn from Carillion’s demise and assess its over-reliance on major contractors. Brian Berry, Chief Executive of the FMB said:

“Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise.”

Berry concluded: “Carillion’s liquidation raises serious questions for the Government, not least about its over-reliance on major contractors. The Government needs to open up public sector construction contracts to small and micro firms by breaking larger contracts down into smaller lots. That way, it can spread its risk while also reaping the benefits that come from procuring a greater proportion of its work from a broad range of small companies. Construction SMEs train two-thirds of all apprentices and are a sure-fire way of spreading economic growth more evenly throughout the UK.”