Carillion left without Whitehall oversight
CRITICISM is mounting over the collapse of Carillion after it emerged there was no senior government official overseeing the company for three months last year.
The construction firm that was hired to help build HS2 and oversee schools, hospitals and prison projects, yesterday went into liquidation, throwing 20,000 jobs and £1.7 billion of government contracts into doubt.
Yesterday it emerged that Julie Scattergood, Carillion’s crown representative, responsible for overseeing the company’s public sector
contracts, retired in August and was not replaced until November.
It meant there was no crown representative in place in September, when Carillion’s shares tumbled after it reported half-year losses of more than £1.2billion, or three weeks later when it issued another profits warning.
Priti Patel, the former international development secretary, said: “The reality is that when you have such a significant contractor responsible for the delivery of front-line services it is not acceptable that the role is left vacant, particularly when contracts are being tendered and key decisions made.”
Jeremy Corbyn, the Labour leader, last night called Carillion’s collapse a “watershed moment” that should end “rip-off privatisation policies”.
The Prime Minister’s office defended private finance partnerships, saying they had delivered billions of investment in infrastructure.
However, Downing Street yesterday questioned why Richard Howson, the chief executive who resigned from Carillion last year, was being paid his £660,000 salary and £28,000 benefits for 12 months after his departure.
David Lidington, the Cabinet Office minister, said receivers could impose “severe penalties” on Carillion executives, including calling back bonuses, if they found evidence of misconduct.
In Oxfordshire, firefighters were put on standby to deliver school dinners in the county amid fears that the collapse of the firm could hit canteen services.
It came as the Government faced calls for a public inquiry into how around £2billion of public sector contracts were given to the troubled firm after it issued profits warnings in July.
Just one week later it was given a £1.4 billion contract for HS2, along with two other MOD contracts. Network Rail gave Carillion a £320million contract in November, while Leeds council agreed a contract for a main road just last week. Ministers yesterday announced emergency moves to underwrite Carillion as they urged staff to work as usual, assuring them that they would be paid.
Mr Lidington said there would be no “bail-out” and that shareholders and lenders would bear the “brunt of the losses”. Government contracts will either be taken over by other suppliers or taken back “in-house”, he said.