Carillion collapse to cost taxpayer £148m, NAO says

07/06/2018
Chris Ames

The liquidation of Carillion will cost UK taxpayers an estimated £148m, the National Audit Office (NAO) has said, excluding around £2.6bn pension liabilities and losses by the firm’s non-government creditors.

The NAO has published its investigation into the Government’s handling of the collapse of the infrastructure and outsourcing giant.

The Government has largely escaped criticism in the report, although the NAO said it needs to ‘do better’ at understanding the financial health of its top suppliers and avoid creating relationships with those that are already weakened.

The Cabinet Office's estimated £148m bill for the insolvency is subject to a range of uncertainties and it could take years to establish the final cost, auditors said. This would be covered by the £150m the Cabinet Office has already provided.

The NAO added that Carillion’s non-government creditors ‘are unlikely to recover much of their investments’, and the company’s extensive pension liabilities, totalling £2.6bn as of June 2017, will need to be compensated through the Pension Protection Fund.

Amyas Morse, the head of the NAO, said: ‘When a company becomes a strategic supplier, dependencies are created beyond the scope of specific contracts.

‘Doing a thorough job of protecting the public interest means that government needs to understand the financial health and sustainability of its major suppliers, and avoid creating relationships with those which are already weakened. Government has further to go in developing in this direction.’

John Trickett MP, Labour’s shadow Cabinet Office minister said the Conservatives had been wrong to say the cost of Carillion’s collapse would be borne by shareholders. He wrote on Twitter: ‘Yet again the public pay the price for a Government blinded by an obsession with privatisation.’

The investigation has identified that the Cabinet Office began planning for the possible failure of Carillion shortly after the company posted its first profit warning in July 2017. It states: ‘The scale of the profit warning came as a surprise to the Government, as it contradicted market expectations and information and commentary that had been provided by Carillion.’

The Cabinet Office raised Carillion’s risk rating from amber to red in response to the profit warning ‘but did not increase Carillion’s rating to its highest rating, “high risk” as it accepted Carillion’s argument that it was already in receipt of the sensitive financial information such a rating would require and that did not wish to risk precipitating Carillion’s financial collapse’.

The company subsequently announced £1.9bn of new government work, including £1.3bn of HS2 contracts. Many contracts had been agreed before the profit warning, although in some cases contracts were signed, or variations agreed, afterwards.

According to the NAO, none of the contracting authorities believed they had grounds for disqualifying Carillion’s contracts under procurement rules. Carillion’s partners in joint ventures were also liable to take over and finish the contracts if Carillion failed.

In the case of Network Rail, ‘not awarding contracts would have meant re-procuring and redesigning the projects, increasing costs for the taxpayer and delaying work'. At the point of liquidation, Carillion had around 420 contracts with the UK public sector.

The Cabinet Office suggests all services have continued uninterrupted following liquidation, although work on some construction contracts stopped including two PFI hospitals, the NAO said.

 

 

 

Highways jobs

Senior Traffic Engineer

East Riding of Yorkshire Council
£32,029 - £34,788 per annum
Currently seeking an enthusiastic and experienced individual to manage our Traffic Team. East Riding of Yorkshire
Recuriter: East Riding of Yorkshire Council

Technician

Derbyshire County Council
£22,628 - £24,455 per annum
Two posts have become available in the Council's Highways Development Control Section Derbyshire
Recuriter: Derbyshire County Council

Head of Network Planning

Derbyshire County Council
£52,999 - £58,310 per annum
This is a key role at Derbyshire County Council that will lead the strategic and operational planning and management of... Matlock, Derbyshire
Recuriter: Derbyshire County Council

Senior Parking Manager

Brent Council
£55,638 - £58,779 p.a. inc.
As Senior Parking Manager, you will be responsible for the effective management of the Council’s Parking Services contract, and... Wembley, London (Greater)
Recuriter: Brent Council

Group Engineer (Highway Design)

Kirklees Metropolitan Council
£39,782 to £43,757 plus £3,000 Market Rate Supplement
Are you an experienced engineer looking for an opportunity to improve the lives of the local people of... Kirklees, West Yorkshire
Recuriter: Kirklees Metropolitan Council

Group Engineer (Highways Network and Asset Management)

Kirklees Metropolitan Council
£39,782 to £43,757
Looking for a Group Engineer who already has... Kirklees, West Yorkshire
Recuriter: Kirklees Metropolitan Council

Validation Officer

London Borough of Richmond upon Thames and London Borough of Wandsworth
£21,188 - £29,796
Are you looking for working arrangements that enhance your work-life balance? London (Greater)
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Ugobus Driver (multiple positions)

Essex County Council
Up to £18938 per annum
Please note that we have permanent, fixed term and relief contract opportunities on a part time, job share and flexible working basis. The salary is u England, Essex, Chelmsford
Recuriter: Essex County Council

Principal Transport & Infrastructure Planning Officer

Essex County Council
£52000 - £57570.0 per annum
Please note this is a two year fixed term contract with a potential for extension, subject to budget and workload. Job purpose Calling all transport P England, Essex, Chelmsford
Recuriter: Essex County Council

Food Safety Environmental Health Officer

Camden London Borough Council
£36,630 to £42,490
Seeking a highly motivated and experienced Environmental Health Officer to join our busy Food Safety team. Camden, London (Greater)
Recuriter: Camden London Borough Council

Policy Planner

London Borough of Richmond upon Thames and London Borough of Wandsworth
£25,327 - £36,486 depending on skills and experience
We have an exciting opportunity within the Spatial and Transport Planning service for 2 x Policy Planner roles... London (Greater)
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Highways Inspector

Cambridgeshire County Council
£19,554 - £23,836
Looking for candidates who have experience of highways maintenance and have a sound technical understanding of highways. Cambridgeshire
Recuriter: Cambridgeshire County Council

Street Services Recruitment Day

Royal Borough of Greenwich
Competitive Salary
This role involves collecting residents and business wheelie bins and waste containers you will work as... Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

Assistant Tree Officer

Camden London Borough Council
£25,880 - £27,904
Looking for an assistant tree officer to join a busy Tree Section working with the most up to date arboriculture equipment’s and IT resources.  Camden, London (Greater)
Recuriter: Camden London Borough Council

Senior Design Engineer - Guildford

Surrey County Council
£39,438 - £43,744 per annum
An opportunity has arisen within Surrey County Council's Highway Design & Delivery Team... Guildford, Surrey
Recuriter: Surrey County Council

Director of External Operations

Somerset West and Taunton Council
£100,000
Somerset West and Taunton Council has been through a transformation that puts customers at the heart of everything we do. Taunton, Somerset
Recuriter: Somerset West and Taunton Council

Zero Emissions Network Officer

Tower Hamlets London Borough Council
£33,759 - £34,986
We are looking for an enthusiastic Zero Emissions Network Officer Tower Hamlets, London (Greater)
Recuriter: Tower Hamlets London Borough Council

Contract Supervisor

London Borough of Richmond upon Thames and London Borough of Wandsworth
£31,013 - £36,486 depending on skills, knowledge and experience
The role of Contract Supervisor (Waste and Street Cleansing) will require you to support ambitious plans to provide services for residents Richmond upon Thames, London (Greater)
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Flood Risk Manager

Birmingham City Council
£43,662 - £54,574
The role requires the post holder to be the lead professional for the Authority’s Flood Risk Management and drainage function Birmingham, West Midlands
Recuriter: Birmingham City Council

Highways on Fridays

Latest Issue

latest magazine issue
  • HIghways Awards shortlist revealed
  • Equity in transport
  • DMRB updates
View the latest issue

Latest Video