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Carillion liquidation: Government statement on the crisis – live updates
Carillion liquidation: Private sector contracts could be terminated in 48 hours - live
(35 minutes later)
David Lidington says that Carillion only held contracts with 230 UK schools.
Another Labour MP, Pat McFadden, asks about the new ‘jobcentre plus’ helpline which the government has set up today.
He confirms that 60% of Carillion’s revenue comes from private sector contracts. There is currently a 48-hour ‘grace period’ while customers decide whether to maintain those contracts or look elsewhere.
Q: Doesn’t that undermine his promise that they will keep being paid if they turn up to work?
Workers on the 40% of public sector accounts will continue to be paid by the Official Receiver, Lidington confirms.
Lidington says that all Carillion workers are protected for the next 48 hours, even those employed on contracts with the private sector [which is three-fifths of Carillion’s business].
Lidington also takes a swipe at Trickett for his argument that Carillion’s contracts should be taken in house.
But after 48 hours, either the private sector counter-party must agree to fund future provision including the fees of the Official Receiver, or those private sector contracts of Carillion will be terminated.
One third of Carillion’s contracts were awarded by the Conservative government, one third were awarded by the last coalition government (2010-2015) and a third were awarded under the previous Labour government.
The new Jobcentre Plus helpline is meant to help those people in particular, Lidington adds.
David Lidington hits back at Labour’s Jon Trickett, pointing out a third of Carillion contracts were signed by the Labour government - when Trickett was working in Brown’s No10
[Reminder: workers on public sector contracts have greater protection; the Receiver will keep operating those contracts]
Jon Trickett asks David Lidington to reassure the House of Commons that Carillion isn’t the first in a series of dominos, and accuses the government of being ‘too cosy’ with Carillion management.
Labour’s Stella Creasy says Carillion has made nearly £1bn profit on PFI contracts over the last four years.
“Reckless, helpless and hopeless” @jon_trickett in the chamber now slamming the Government over Carillion collapse pic.twitter.com/3MhOFRB7T3
Will the government now bring in a windfall tax on PFI profits?
Labour’s Jon Trickett is responding to David Lidington.
Cabinet Office minister David Lidington replies that PFI has provided £60bn of capital to improve public services.
He says Lidington’s statement was ‘recklessly complacent’ in trying to avoid taking responsibility for the collapse of Carillion, which held 450 government contracts.
PFI is not an ‘easy ticket for riches’ for contractors, he insists. In this case, the shareholders and creditors of Carillion are suffering very significant losses.
Trickett is also alarmed that Lidington mentioned the support available from Job Centre plus - that will send a shudder of fear through its 20,000 UK workforce.
Extraordinary to hear Government ministers calling for review of procurement and suggesting a tighter grip on companies used - this government supposedly reviewed and fixed PFI problems in 2012 and created PF2. Which carillion contracts are… #pfiddle
He asks Lidington to confirm that Carillion provided services at 50 prisons, 9000 schools, 200 operating theatres and 11,800 hospital beds.
Labour’s Hilary Benn asks David Lidington to confirm that all payments made to Carillion under PFI contracts from councils will not cease, and that the Official Receiver will not be allowed to sell these contracts on.
40% of Carillion’s income is derived from UK, Trickett says.
Lidington says he isn’t aware of any PFI contracts facing an immediate crisis; but the future of all Carillion contracts depends on finding fresh suppliers to take them on.
And if the government was really watching Carillion closely, as it claims, why did it allow the crucial role of Crown Representative of Carillion to lapse for three months?
Conservative MP Sir Desmond Swayne asks whether government officials are capable of spotting when a company is pitching its services too cheaply.
Lidington says that the private sector plays an important role delivering UK public services - something that parties on both sides of the House of Commons have accepted.
Lidington says there should be a ‘fresh look’ into how the government handles such issues.
Lidington say the government’s role is to plan and prepare contingency measures for Carillion.
Labour’s Rachel Reeves points out that Carillion kept paying dividends to shareholders, even as it ran up £900m of debts and a £580m pensions black hole.
Its ‘top priority’ is to keep public services running, so the government will support the Official Receiver to deliver uninterrupted services.
And it is still paying £600,000 to its ex-CEO (Richard Howson)
The Receiver is under a duty to report any improper conduct by officials, Lidington says.
Q: Can you confirm that those payments to Carillion’s CEO end today?
The investigation will look at the conduct of directors at the point of insolvency, and also the actions of previous directors.
Lidington repeats that the Official Receiver will examine whether directors have acted properly (which I think means that Howson’s payments continue for the moment...)
They will also consider whether any actions from directors has hurt the company’s pension scheme.
Echoing Bill Cash’s comments, Conservative MP Dame Cheryl Gillan says that Carillion’s demise is a great opportunity to cancel HS2.
Lidington also insists that the government has been watching Carillion closely since its first profit warning last July - triggering some critical noises from the opposition benches.
Lidington reiterates that Carillion’s liquidation doesn’t affect the construction of HS2.
MPs noisily reaction to @DLidington's assertion that govt has been monitoring #Carillion closely since July profit warning
Labour MP Emma Reynolds asks Lidington about the revelation that Carillion changed its bonus rules, to make it harder to claw money back from bosses.
Cabinet office minister David Lidington is delivering a statement on the Carillion crisis to MPs now.
Lidington says he mustn’t pre-empt the Official Receiver’s probe into the conduct of past and present directors. But he emphasises that the Receiver can impose ‘severe’ penalties if there has been misconduct.
He says the failure of Carillion is regrettable, but it is the failure of a private sector company. Its shareholders and lenders should bear the brunt of the cost.
Tory MP Bill Cash asks about the impact on High-Speed Two .
Taxpayers should not and will not bail out a private sector company for private sector losses, Lidington insists (how thing have changed since the financial crisis in 2008!).
Does Carillion’s collapse affect the viability of the project?
Breaking away from parliament, Britain’s prison officers are urging the government to take Carillion’s contract for prison maintenance back into public hands.
Lidington says HS2 will continue as planned, as the two other private sector parties will take over Carillion’s responsibilities (that’s Kier, and French civil engineering group Eiffage).
Steve Gillan, general secretary of the POA trade union, says facilities have deteriorated on Carillion’s watch.
Bill Cash, whose constituency is "carved up" by #HS2, asks about impact on his consituents. @DLidington reconfirms that other JV partners are bound to continue project, for same price #Carillion
We need to know the contingency plans to keep our prisons operational. During the time Carillion had this contract the level of essential maintenance and work that is outstanding has spiraled out of control.
Labour MP Eleanor Smith says the liquidation of Carillion hit workers like a bomb today (the company’s HQ is in her Wolverhampton constituency).
This has resulted in loss of prison accommodation and in-humane conditions in our prisons.
What support will the government provide? What future can ministers provide?
My colleague Amelia Gentleman warned last year that Wandsworth prison wasn’t keeping up to speed with repairs:
Lidington agrees to meet with her to discuss what support can be provided to the company’s staff.
When I visited Wandsworth prison I was surprised at how many cell windows were broken - too many to count. It was January and quite cold. Staff said responsibility for mending windows had been outsourced to #Carillion https://t.co/ayvkBcqytX
Wolverhampton South West MP Eleanor Smith asking for a meeting with govt, sounds genuinely moved by it all #Carillion. @DLidington says happy to meet.
Britain’s top civil servant, cabinet secretary Sir Jeremy Heywood, admits that Carillion has gone badly wrong.
Conservative MP Iain Duncan-Smith congratulates David Lidington on his ‘swift action’ over Carillion.
The Cabinet Secretary says to @commonspacac that the collapse of #Carillion is a 'bad outcome for the country' pic.twitter.com/18VyGvMwqv
He says Labour drove the move towards outsourcing public services (during the Blair-Brown years).
Sir Jeremy Heywood: The system as a whole is robust, but clearly Carillion has gone badly wrong. #Carillion we have launched an inquiry https://t.co/19I6atLIhB pic.twitter.com/gD045Tn9lK
Lidington replies that his immediate priority is focusing on the continuity of public services, but eventually ministers should look at the wider issue of outsourcing.
John Manzoni tells the PAC committee that he hopes that “most” of the jobs and pensions at Carillion will be preserved.
The SNP’s Tommy Sheppard asks what will happen to Carillion’s contracts in Scotland.
That’s effectively an admission that some won’t be....
He also asks what due diligence was carried out by the government, given it handed Carillion £2bn of contracts in recent months.
Manzoni: we hope that most of the the pensions of the 20,000 people employed by Carillon will continue to be paid #Carillion pic.twitter.com/jI4a7CHv05
Q: Was it incompetence or ideology that led to ministers signing off multi-million pound contracts to a company that was going bust?
The Public Accounts Committee is uncovering some intriguing detail into the Carillion breakdown, as it quizzes Cabinet Office head honcho John Manzoni.
David Lidington assures Sheppard that the government will continue to pay the salaries and bills owed by Carillion in Scotland, as in the rest of the UK.
Manzoni has revealed that the government’s Crown Representative ‘rotated off’ the Carillion account this summer - just when the company suffered its first profit warning.
Some contracts will be transferred to other suppliers, he suggests, while others could be taken in-house by the government.
[explanation: a Crown Representative is a senior role, meant to help the government get a good deal from its suppliers]
This meant that “the horsepower” around the Carillion was provided by the strategic partnership management team, who Manzoni insists ‘played a blinding role’.
The committee aren’t impressed; one MP asks whether this meant they had their eyes covered.
No, says Manzoni coldly. The head of this team did a very good job, he insists.
Whitehall boss John Manzoni admits Carillion’s monitoring Crown Representative rotated off in the summer to focus on other work, at the time of the profits warning....
But Manzoni also seems to imply that Carillion’s second profits warning, two months ago, jolted the civil service:
Manzoni concedes in front of MPs that while Carillion's July profit warning that put civil servants 'on notice' officials only 'really started to notice in November' after the *second* profit warning. Does that mean at first they missed it?
