Carillion warning

The extraordinary diversity of Carillion’s construction interests is indicative of a company that has spread its wings too far. The fact that the business risks crashing to earth with serious consequences for its 43,000 employees, shareholders and the taxpayer owes much to the mistakes of those who allowed this behemoth to develop and continued to feed it when its difficulties became apparent. Despite repeated profit warnings it has been awarded sensitive new contracts from the Transport Department and MOD.

With key roles in so many infrastructure projects Carillion’s failure would be disruptive at best. The priority now is to see what can be salvaged, but questions will be asked why ministers and officials placed so many public-sector eggs in one privatesector basket. Rightly, the Government is resisting a bail-out and expects shareholders and creditors to take the hit. But because so much of Carillion’s work involves state contracts, ministers have a responsibility – and their options are limited.

If Carillion does go under there will be pressure for a reassessment of some of the schemes it is undertaking. Opponents of the HS2 link will seek to derail the project. In addition, the pension deficit of some £580 million will become another burden on the Pension Protection Fund. What taxpayers will emphatically not put up with is any sign that those at the company responsible for this mess walk away enriched. There have been too many instances of failure being rewarded. It is time it stopped.