Carillion has contracts across Whitehall including in health, education, defence and the prison service ©Peter Langdown/Carillion plc
Carillion has contracts across Whitehall including in health, education, defence and the prison service ©Peter Langdown/Carillion plc

Crisis talks over key government outsourcing partner Carillion

12 January 2018

A high-level meeting took place in Whitehall to discuss the possible collapse of Carillion, the Cabinet Office (CO) has confirmed to SM.

The ministerial meeting took place yesterday (Thursday), and a CO spokesperson said the government was monitoring the situation to ensure “contingency plans are robust”. The spokesperson declined to elaborate on what the plans were.

[Update] Since the meeting, Carillion has announced it is going into liquidation. CO minister David Lidington told the BBC's Today programme the government would pay staff wages on public sector contracts until alternative contractors could be arranged.

Carillion is one of the government’s biggest contractors, and has contracts across Whitehall including in health, education, defence and the prison service.

The firm’s government contracts include two of the seven HS2 phase one civil packages – as part of joint ventures – worth £1.34bn, two maintenance contracts with Network Rail worth more than £320m and £158m worth of military services contracts among others. Carillion also provides facilities management for 875 schools and is heavily involved in developing smart motorways as well as other road maintenance projects. 

The firm reported debts of £571m as of June last year, however it is estimated that this could now be as high as £1.5bn. The firm also reported a pensions deficit of £587m.

The crisis meeting was said to have been attended by a number senior ministers, including Lidington, business secretary Greg Clark, transport minister Jo Johnson, justice minister Rory Stewart and chief secretary to the Treasury Liz Truss, the Financial Times reported.

Ministers from the culture, health and education departments and the Foreign Office were also said to be in attendance.

Shadow business secretary Rebecca Long-Bailey has said the collapse of Carillion could provoke a “serious crisis”, and criticised the government’s use of outsourcing.

“[Carillion’s collapse] would have major implications for the outsourced government contracts the company holds, as well as the firm’s thousands of workers, those in the supply chain and those who rely on Carillion’s pension fund.

“The government, who despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services.” 

Her views were echoed by Unite union, which called for the government to consider bringing contracts back in house. Gail Cartmail, Unite assistant general secretary, said: “If the government is forced to institute a rescue package they need to also ensure that the supply chain is fully protected.”

The CO told SM: “As Carillion is a major supplier to government it should come as no surprise that we are carefully monitoring the situation while working to ensure our contingency plans are robust.

“We are committed to maintaining a healthy supplier market and work closely with our key suppliers. The company has kept us informed of the steps it is taking to restructure the business.”

Carillion told SM it had presented its business plan to financial creditors and stakeholders on Wednesday and it had no further comment.

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