Inexcusable
Not ONE Minister met with crisis firm after it issued profits warning last July Instead, Tories awarded company public contracts worth £1bn-plus
MINISTERS failed to meet with Carillion chiefs even after the construction giant sounded the alarm over its finances.
A profit alert in July did not prompt a single one to meet the firm before it won public contracts worth more than £1billion, it emerged yesterday.
Labour’s Shadow Business Secretary Rebecca Long-Bailey said it was “astonishing” the Government did not appear sufficiently worried to hold talks.
It comes after Carillion collapsed on Monday, leaving thousands of jobs and smaller businesses at risk.
The Government awarded Carillion two contracts for the HS2 railway worth £1.4billion, a week after the first of its three profit warnings.
The next day it won two defence contracts worth £158million and, in November, two contracts to electrify the London to Corby rail route.
Records analysed by the Financial Times showed there were no meetings between Carillion and ministers from the Cabinet Office, Department for Transport or Ministry of Defence between July and September that were related to the contracts.
Records for September to December are yet to be released. But Labour has lodged questions to find out whether ministers probed the state of the firm.
Earlier this week we revealed the Government failed to appoint a Crown representative to work with Carillion between August and November. Theresa May later insisted two officials from the Cabinet Office had kept tabs on the firm instead, and that most of the contracts awarded in late 2017 were joint ventures.
She added: “If the Government pulled out of contracts... whenever a profit warning was issued, that would be the best way to ensure companies failed and jobs were lost.”
Cabinet Office Minister David Lidington also insisted that all the necessary tests were passed when the HS2 contracts were awarded.
The Cabinet Office said: “Officials with specific commercial expertise worked closely with Carillon throughout this period, keeping ministers up to date on the situation.”
Much of Carillion’s work was contracted out to smaller firms. Up to 30,000 may be owed cash. Three banks are to provide a total of £225million in support for business customers.
But Mike Cherry, of the Federation of Small Businesses, said: “It is only a sticking plaster to help those who are viable to continue in business and recover in time.”
We told yesterday how Larc Construction is owed £200,000 by Carillion and has already had to lay off 15 of its 20 staff.
It had been working on Midland Metropolitan Hospital. Co-founder Josh Lee, a former soldier, said his firm was owed money for three months’ work. He added the banks’ offer effectively extends lending which he did not want on his business’s books. Mr Lee, 30, said: “It’s digging us deeper in the hole.”
Parliament’s Liaison Committee, comprising all select committee chairs, has opened a probe into Carillion.
Work and Pensions Committee chairman Frank Field said: “I will be proposing we take evidence from the directors, trustees, pensions regulator and auditors who somehow concluded Carillion was a going concern.”
Questions remain over corporate governance and also the role of KPMG, which signed off the 2016 accounts.
Meanwhile Network Rail said it has come to an agreement with the Official Receiver and accountants PwC to guarantee pay for Carillion employees on its projects until at least mid-April.
It is only a sticking plaster to help those who can continue MIKE CHERRY ON SUPPORT FOR FIRMS HIT