Carillion on the brink as it begs for taxpayers’ cash
ONE of Britain’s biggest companies was desperately pleading for a vast taxpayer bailout last night to avert a financial collapse putting tens of thousands of jobs at risk.
Troubled construction and engineering giant Carillion is set to hold last-ditch rescue talks with Whitehall officials today. The company needs to find £300million by the end of the month to stay afloat.
The group already receives more than £1billion of taxpayers’ money in government contracts each year. It employs 19,500 staff in the UK.
Despite substantial income from the state, Carillion has debts of more than £900million, and a £600million hole in its pension fund. The Prime minister is being briefed on the crisis, with accountancy firm EY on standby to act as administrator if Carillion goes under.
But Liberal Democrat leader and former Business Secretary Sir Vince Cable said: ‘The Government can’t just do a financial bailout. The shareholders and the creditors – the big banks – have got to take a hit.’
much of the blame for Carillion’s parlous state is being directed at former boss Richard Howson, 49, who left last September, having received more than £6million in pay and bonuses since taking over as chief executive in 2012. He will continue to receive his £660,000 basic salary until his notice period expires at the end of October.
Labour mP Rachel Reeves, who chairs the influential Business Select Committee, said: ‘It’s absolutely staggering that after resigning following a profits warning, the chief executive has continued to take home more than £50,000 a month. He shouldn’t be paid. He should be taking responsibility.’
Carillion’s state projects include the HS2 high-speed rail-line and the construction of major hospitals, schools and roads.
In Scotland, Carillion has been involved in major infrastructure projects such as the electrification of the central Scotland railway line through Shotts. Currently it is working on extensions to platforms at Edinburgh’s Waverley Station and on construction of the £745 million Aberdeen bypass.
Scotland’s Business Secretary Keith Brown has indicated that work on the bypass will continue regardless, as contingency plans are built into the scheme.
The Wolverhampton-based firm is the second-largest supplier to Network Rail, and maintains about half the UK’s prisons and about 50,000 homes for the ministry of Defence. It has been awarded several major government contracts in recent months despite issuing a series of stark profit warnings.
A spokesman said Carillion is ‘in constructive dialogue in relation to additional short-term financing’. But mPs warned a failure of the business would cause ‘a huge crisis’ with thousands of jobs at risk.
The Government has prepared a contingency plan for Carillion’s collapse and is understood to have drafted in private sector advisers to handle the fall-out for projects and contracts, with the Cabinet Office touting Carillion’s contracts to rival firms.