Carillion collapse cost taxpayer £162m with Crossrail overspend
THE implosion of Carillion helped hit taxpayer-funded Network Rail with a £162m bill for recontracting parts of the massive Crossrail project, rail regulators have revealed.
A report published by the Office of Rail and Road (ORR) on Network Rail spending found that it had overspent its budget by £10bn during a five-year period to March 2019, with part related to “financial underperformance” on Crossrail.
The project to drive a new line from Reading to Essex, underground through the heart of London, is running two years late and has breached its £15bn cost by billions of pounds.
While the project, due to be known as the Elizabeth Line when it finally opens, is coordinated by Crossrail and Transport for London, Network Rail is responsible for certain parts of it.
Carillion was awarded contracts by Network Rail in 2013. But when it collapsed in 2018, the organisation was forced to retender the work. “Crossrail financially underperformed by £162m due to changes to contractors including the collapse of Carillion, and other factors,” the ORR report found.
The financial responsibility for Carillion’s liquidation fell on the Government’s Official Receiver, part of the Insolvency Service, rather than an accountancy firm, as is the normal case with bankruptcies. Despite ministers insisting at the time that cost of Carillion’s failure would not fall on the taxpayer, the National Audit Office has so far estimated the bill at around £148m.
Labour MP Meg Hillier, the chairman of Government spending watchdog the public accounts committee, said she would continue to investigate the total cost of Carillion’s failure to the public. The committee would be making fresh inquiries in the autumn, she said.
She added: “When the private sector fails, it seems that the taxpayer picks up the bill.”
A Network Rail spokesman said: “Cost pressures on the Crossrail Network Rail works have multiple drivers but the main ones are delays and scope changes to our work in the East with Costain, as well as other contractors seeing increases such as Vinci and Balfour Beatty.
“The retendering of work packages in the West owing to Carillion liquidation also had an impact.”