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Carillion collapse: Ministers hold emergency meeting Carillion collapse: Ministers hold emergency meeting
(35 minutes later)
Cabinet ministers will hold a crisis meeting to keep vital public services going after the collapse of key government contractor Carillion. Cabinet ministers are holding a crisis meeting to keep vital public services going after the collapse of key government contractor Carillion.
The construction giant, which provides services for schools, prisons and hospitals, has gone into liquidation, threatening thousands of jobs.The construction giant, which provides services for schools, prisons and hospitals, has gone into liquidation, threatening thousands of jobs.
An emergency Cobra meeting will be held to deal with the fallout. An emergency Cobra meeting was planned for 18:30 GMT to deal with the fallout.
Carillion ran into trouble after losing money on big contracts and running up huge debts of around £1.5bn.Carillion ran into trouble after losing money on big contracts and running up huge debts of around £1.5bn.
The government is stepping in to pay employees and small businesses working on Carillion's public contracts, said cabinet minister David Lidington.The government is stepping in to pay employees and small businesses working on Carillion's public contracts, said cabinet minister David Lidington.
"The action we have taken is designed to keep vital public services running rather than to provide a bailout on the failure of a commercial company," Mr Lidington told parliament."The action we have taken is designed to keep vital public services running rather than to provide a bailout on the failure of a commercial company," Mr Lidington told parliament.
Carillion, the UK's second biggest construction firm, was also involved in major projects such as the HS2 high-speed rail line.Carillion, the UK's second biggest construction firm, was also involved in major projects such as the HS2 high-speed rail line.
The firm provides maintenance for prisons and hospitals, as well as services including dinners and cleaning for hundreds of schools. The firm has 450 government contracts, including maintenance for prisons and hospitals, as well as dinners and cleaning for hundreds of schools.
It is also the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.It is also the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.
Labour has accused the government of being "recklessly complacent" over Carillion's collapse.Labour has accused the government of being "recklessly complacent" over Carillion's collapse.
The government has disclosed that it awarded eight contracts to the company after it issued profit warnings - six of which were joint ventures with other firms.The government has disclosed that it awarded eight contracts to the company after it issued profit warnings - six of which were joint ventures with other firms.
Shadow business secretary Rebecca Long-Bailey said: "This company issued three profit warnings in the last six months, yet despite those profit warnings the government continued to grant contracts to this company."Shadow business secretary Rebecca Long-Bailey said: "This company issued three profit warnings in the last six months, yet despite those profit warnings the government continued to grant contracts to this company."
Carillion chairman Philip Green said it was a "very sad day" for the company's workers, suppliers and customers. Carillion has 43,000 staff worldwide, including 20,000 in the UK.
The company has 43,000 staff worldwide, including 20,000 in the UK.
There are also thousands of small firms that carry out work on Carillion's behalf - many of those have contacted the BBC with concerns about whether they will be paid.There are also thousands of small firms that carry out work on Carillion's behalf - many of those have contacted the BBC with concerns about whether they will be paid.
One company, which provided services for Carillion's prisons contract, told the BBC that it might fail if it is not paid the £80,000 owed to it.One company, which provided services for Carillion's prisons contract, told the BBC that it might fail if it is not paid the £80,000 owed to it.
A worker on the new Midland Metropolitan Hospital building, who wanted to only be identified as Philip, told the BBC: "Everyone on the site got told: 'That's it, go home.' My company said, 'You've been laid off.'A worker on the new Midland Metropolitan Hospital building, who wanted to only be identified as Philip, told the BBC: "Everyone on the site got told: 'That's it, go home.' My company said, 'You've been laid off.'
"They've literally locked the gate. They've told us we can get our personal tools off the site if they're small, but that's it.""They've literally locked the gate. They've told us we can get our personal tools off the site if they're small, but that's it."
Analysis: Simon Jack, BBC business editor
Damned if they did, damned if they didn't?
The government refused to insure Carillion's debts, so the banks pulled the plug. If it had offered guarantees to big banks on behalf of a private company it might have been accused of nationalising losses while privatising profits.
The whole point of having private companies do public work is that they shoulder some of the risk. The truth is the government has been helping out Carillion for a while. Awarding it contracts when it knew it was in trouble raised eyebrows last year.
The government constructed the HS2 contracts so that Carillion's joint venture partners would take on the work if the company went bust - meanwhile it hoped the new contracts would be enough to make Carillion's lenders feel reassured.
Industry sources tell me that if the company hadn't been awarded new government work it would have been curtains for Carillion months ago.
What happens next depends on the actions of a court-appointed official receiver. With the help of a team of experts from accountants PwC, the receiver will review Carillion's business - a process which could take months.What happens next depends on the actions of a court-appointed official receiver. With the help of a team of experts from accountants PwC, the receiver will review Carillion's business - a process which could take months.
The government has already said it is supporting public services and other firms are likely to take on some of Carillion's other contracts and staff. The government could take some public services in-house, while other firms may take on some of Carillion's other contracts.
Pension impactPension impact
Thousands of current and former staff have money in Carillion pension funds, which have a total deficit of almost £600m.Thousands of current and former staff have money in Carillion pension funds, which have a total deficit of almost £600m.
Those funds will now be managed by the Pension Protection Fund (PPF).Those funds will now be managed by the Pension Protection Fund (PPF).
The PPF said it was aware news of the liquidation would "raise serious concerns for all people involved". The PPF said: "We want to reassure members of Carillion's defined benefit pension schemes that their benefits are protected by the PPF."
"We want to reassure members of Carillion's defined benefit pension schemes that their benefits are protected by the PPF."
Carillion might not be a household name, but over the years it has absorbed better-known businesses, including Mowlem and Alfred McAlpine.Carillion might not be a household name, but over the years it has absorbed better-known businesses, including Mowlem and Alfred McAlpine.
It also has a big international business, including a huge construction project in Qatar related to the 2022 FIFA World Cup.It also has a big international business, including a huge construction project in Qatar related to the 2022 FIFA World Cup.
In addition it is a big supplier of construction services to the Canadian government.In addition it is a big supplier of construction services to the Canadian government.
Its biggest problems were cost overruns on three UK public sector construction projects:Its biggest problems were cost overruns on three UK public sector construction projects:
'Public service''Public service'
Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, said Carillion's collapse "really shakes public confidence in the ability of the private sector to deliver public services and infrastructure".Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, said Carillion's collapse "really shakes public confidence in the ability of the private sector to deliver public services and infrastructure".
His committee is launching an inquiry into government outsourcing following the demise of Carillion.His committee is launching an inquiry into government outsourcing following the demise of Carillion.
Mick Cash, the general secretary of the Rail, Maritime and Transport (RMT) union, said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain.Mick Cash, the general secretary of the Rail, Maritime and Transport (RMT) union, said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain.
Rehana Azam, national officer of the GMB union, said: "What's happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons."Rehana Azam, national officer of the GMB union, said: "What's happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons."
Are you employed by Carillion? What are your concerns? You can share your experience by emailing haveyoursay@bbc.co.uk.Are you employed by Carillion? What are your concerns? You can share your experience by emailing haveyoursay@bbc.co.uk.
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