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You can find the current article at its original source at https://www.theguardian.com/business/live/2018/jan/16/uk-inflation-cpi-poud-carillion-collapse-fallout-business-live
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| Carillion crisis: Theresa May rules out bailout as Labour accuses ministers of collusion - as it happened | |
| (35 minutes later) | |
| The Metro has former Carillion boss Richard Howson in its sights, as he owns a six-bedroom ski chalet in the Alps.... | The Metro has former Carillion boss Richard Howson in its sights, as he owns a six-bedroom ski chalet in the Alps.... |
| Tomorrow's front page:TAKING THE PISTE#tomorrowspaperstoday #bbcpapers #skypapers pic.twitter.com/kyWjYad34X | Tomorrow's front page:TAKING THE PISTE#tomorrowspaperstoday #bbcpapers #skypapers pic.twitter.com/kyWjYad34X |
| Our latest Carillion story, about the strain on suppliers, is on tomorrow’s front page: | Our latest Carillion story, about the strain on suppliers, is on tomorrow’s front page: |
| GUARDIAN: Teach five year olds the danger of knife crime #tomorrowspaperstoday pic.twitter.com/1e6lUvJgyL | GUARDIAN: Teach five year olds the danger of knife crime #tomorrowspaperstoday pic.twitter.com/1e6lUvJgyL |
| Hello again. Wednesday’s front pages are coming through, and many are leading on the Carillion crisis. | Hello again. Wednesday’s front pages are coming through, and many are leading on the Carillion crisis. |
| The Daily Telegraph’s business section focuses on the meagre scraps that will be available to Carillion’s creditors: | The Daily Telegraph’s business section focuses on the meagre scraps that will be available to Carillion’s creditors: |
| TELEGRAPH BUSINESS: Carillion creditors in line for less than 1p in £1 #tomorrowspaperstoday pic.twitter.com/eu9lSUF6Gx | TELEGRAPH BUSINESS: Carillion creditors in line for less than 1p in £1 #tomorrowspaperstoday pic.twitter.com/eu9lSUF6Gx |
| City AM says Carillion’s directors face mounting pressure as the ‘fast-track’ probe into their activities looms: | City AM says Carillion’s directors face mounting pressure as the ‘fast-track’ probe into their activities looms: |
| CITY AM: Screws turn in Carillion execs #tomorrowspaperstoday pic.twitter.com/KH5QeEgz1n | CITY AM: Screws turn in Carillion execs #tomorrowspaperstoday pic.twitter.com/KH5QeEgz1n |
| The FT leads on those court papers, showing how Carillion had run so short of cash: | The FT leads on those court papers, showing how Carillion had run so short of cash: |
| FINANCIAL TIMES: Cash strapped Carillion held just £29m in its final days #tomorrowspaperstoday pic.twitter.com/rRuRcsx7Tb | FINANCIAL TIMES: Cash strapped Carillion held just £29m in its final days #tomorrowspaperstoday pic.twitter.com/rRuRcsx7Tb |
| The Morning Star predicts that Carillion’s rivals will also be dragged into trouble: | The Morning Star predicts that Carillion’s rivals will also be dragged into trouble: |
| Carillion fall is just the beginning #tomorrowspaperstoday pic.twitter.com/582XktItXQ | Carillion fall is just the beginning #tomorrowspaperstoday pic.twitter.com/582XktItXQ |
| The dramatic collapse of Carillion has started to hit thousands of the firm’s suppliers, as the real world impact of the demise starts to emerge, the Guardian reports tonight. | The dramatic collapse of Carillion has started to hit thousands of the firm’s suppliers, as the real world impact of the demise starts to emerge, the Guardian reports tonight. |
| Subcontractors owed money by the construction and services giant are already being pressurised by their banks and have begun laying off workers, as the threat of contagion afflicting the sector was likened to a near re-run of the banking crisis. | Subcontractors owed money by the construction and services giant are already being pressurised by their banks and have begun laying off workers, as the threat of contagion afflicting the sector was likened to a near re-run of the banking crisis. |
| Andrew Adonis, the former Labour transport minister, said: | Andrew Adonis, the former Labour transport minister, said: |
| “It is a bit like Lehman Brothers [the Wall Street investment bank that collapsed in 2008]. You don’t know what the impact will be. | “It is a bit like Lehman Brothers [the Wall Street investment bank that collapsed in 2008]. You don’t know what the impact will be. |
| A very large part of Carillion’s work was project management where subcontractors do the work, but these subcontractors don’t know if they will be paid.” | A very large part of Carillion’s work was project management where subcontractors do the work, but these subcontractors don’t know if they will be paid.” |
| The supplier concerns came as the liquidators PricewaterhouseCoopers said they would not pay any bills “for goods/services provided before the liquidation date [on Monday]”, while Carillion workers providing services to private sector firms face having their wages stopped on Wednesday unless another employer steps in to take over. | The supplier concerns came as the liquidators PricewaterhouseCoopers said they would not pay any bills “for goods/services provided before the liquidation date [on Monday]”, while Carillion workers providing services to private sector firms face having their wages stopped on Wednesday unless another employer steps in to take over. |
| Here’s our full story: | Here’s our full story: |
| Subcontractors begin laying off staff after Carillion collapse https://t.co/fpZBBdZace | Subcontractors begin laying off staff after Carillion collapse https://t.co/fpZBBdZace |
| The UK government is under growing pressure tonight over its handling of the collapse of Carillion, one of the UK’s biggest contractors. | The UK government is under growing pressure tonight over its handling of the collapse of Carillion, one of the UK’s biggest contractors. |
| Prime minister Theresa May has insisted that taxpayers should not have bailed out Carillion, which plunged into liquidation yesterday. She told a cabinet meeting that the government would be “vigilant in monitoring for any emerging issues in public services” at schools, hospitals, prisons and beyond. | Prime minister Theresa May has insisted that taxpayers should not have bailed out Carillion, which plunged into liquidation yesterday. She told a cabinet meeting that the government would be “vigilant in monitoring for any emerging issues in public services” at schools, hospitals, prisons and beyond. |
| Labour, though, have accused ministers of ‘colluding’ to keep Carillion in business, even as it posted a string of profit warnings. | Labour, though, have accused ministers of ‘colluding’ to keep Carillion in business, even as it posted a string of profit warnings. |
| Shadow Chancellor John McDonnell told parliament: | Shadow Chancellor John McDonnell told parliament: |
| “When there were loud and clear worrying signs about Carillion, why, instead of intervening, did the Treasury Minister collude in the strategy of drip-feeding more contracts to Carillion to buoy up an obviously failing company?” | “When there were loud and clear worrying signs about Carillion, why, instead of intervening, did the Treasury Minister collude in the strategy of drip-feeding more contracts to Carillion to buoy up an obviously failing company?” |
| “I put it no stronger than this: at this stage, there are real suspicions that the Government was too close to this company and too wedded to its privatisation role. | “I put it no stronger than this: at this stage, there are real suspicions that the Government was too close to this company and too wedded to its privatisation role. |
| The government is promising to provide support for thousands of British staff working for private-sector companies inside the stricken conglomerate. But their wages are only guaranteed until Wednesday under the current contingency plans. | The government is promising to provide support for thousands of British staff working for private-sector companies inside the stricken conglomerate. But their wages are only guaranteed until Wednesday under the current contingency plans. |
| Unions have warned that the clock is ticking. They urged ministers to protect the 8,500 workers on private sector contracts, who fear losing their jobs and being unable to pay their mortgages. | Unions have warned that the clock is ticking. They urged ministers to protect the 8,500 workers on private sector contracts, who fear losing their jobs and being unable to pay their mortgages. |
| The TUC has called for a new National Task Force. It would protect jobs, pensions and services, and look for other serious problems in the outsourcing industry. | The TUC has called for a new National Task Force. It would protect jobs, pensions and services, and look for other serious problems in the outsourcing industry. |
| Carillion’s directors are also under the microscope. The government has ordered a ‘fast-track’ investigation into their conduct, and a full investigation of the work done by the company’s auditors, KPMG. | Carillion’s directors are also under the microscope. The government has ordered a ‘fast-track’ investigation into their conduct, and a full investigation of the work done by the company’s auditors, KPMG. |
| Papers filed at the high court show that Carillion’s many creditors may get as little as 1p in the pound. That would be a very serious blow to small firms who were owed money for work they’d carried out. | Papers filed at the high court show that Carillion’s many creditors may get as little as 1p in the pound. That would be a very serious blow to small firms who were owed money for work they’d carried out. |
| Some have already begun firing staff. | Some have already begun firing staff. |
| Although Carillion wasn’t a household name, the collapse of such a major player in the outsourcing and construction industry has rattled the sector. | Although Carillion wasn’t a household name, the collapse of such a major player in the outsourcing and construction industry has rattled the sector. |
| Could other firms be next? | Could other firms be next? |
| My colleague Nick Fletcher has been kicking the tyres of rivals such as Serco, G4S, Capita and Balfour Beatty to test their resilience. | My colleague Nick Fletcher has been kicking the tyres of rivals such as Serco, G4S, Capita and Balfour Beatty to test their resilience. |
| Here’s his verdict on Capita: | Here’s his verdict on Capita: |
| About half of Capita’s annual turnover of £4.9bn comes from central and local government work, ranging from administering the teachers’ pension scheme to providing tech services to the NHS, electronic monitoring services and running the Gas Safe register for the Health and Safety Executive. It has 70,000 UK employees, and a net debt of £1.6bn compared with its market value of £2.8bn. | About half of Capita’s annual turnover of £4.9bn comes from central and local government work, ranging from administering the teachers’ pension scheme to providing tech services to the NHS, electronic monitoring services and running the Gas Safe register for the Health and Safety Executive. It has 70,000 UK employees, and a net debt of £1.6bn compared with its market value of £2.8bn. |
| The company’s shares have lost two-thirds of their value over the past two years after a series of profit warnings and boardroom changes. | The company’s shares have lost two-thirds of their value over the past two years after a series of profit warnings and boardroom changes. |
| Here’s Nick’s full verdict: | Here’s Nick’s full verdict: |
| Accountancy firm PwC is under scrutiny tonight over its involvement in Carillion’s collapse. | Accountancy firm PwC is under scrutiny tonight over its involvement in Carillion’s collapse. |
| PwC staff were appointed as ‘special managers’ yesterday, to help the Official Receiver run the company. But the firm doesn’t come to the crisis with a blank slate - last year, it was advising Carillion’s pension trustees, according to the Financial Times. | PwC staff were appointed as ‘special managers’ yesterday, to help the Official Receiver run the company. But the firm doesn’t come to the crisis with a blank slate - last year, it was advising Carillion’s pension trustees, according to the Financial Times. |
| These ‘multiple roles’ don’t look great, the FT says tonight: | These ‘multiple roles’ don’t look great, the FT says tonight: |
| The head of a rival accounting firm, who requested anonymity, added that PwC’s appointment “simply looks wrong”. | The head of a rival accounting firm, who requested anonymity, added that PwC’s appointment “simply looks wrong”. |
| “From a professional point of view they might just be the right side of the line [in terms of managing conflicts], but optically they will be on a hiding for nothing. | “From a professional point of view they might just be the right side of the line [in terms of managing conflicts], but optically they will be on a hiding for nothing. |
| Even if they are OK, they are not OK,” he said. PwC, which is expected by other executives to earn as much as £50m from the liquidation process, declined to comment. | Even if they are OK, they are not OK,” he said. PwC, which is expected by other executives to earn as much as £50m from the liquidation process, declined to comment. |
| PwC:— advised Carillion’s pension trustees on its financial difficulties— advised gov on what to do if Carillion collapsed— are handling the liquidation now that it has collapsedhttps://t.co/UbtJAIbt8Z | PwC:— advised Carillion’s pension trustees on its financial difficulties— advised gov on what to do if Carillion collapsed— are handling the liquidation now that it has collapsedhttps://t.co/UbtJAIbt8Z |
| On the other hand.... the government could hardly appoint KPMG or Deloitte, as they have both acted as Carillion’s auditors, while EY had also advised Carillion. | On the other hand.... the government could hardly appoint KPMG or Deloitte, as they have both acted as Carillion’s auditors, while EY had also advised Carillion. |
| That only leaves smaller firms, who might have less expertise or experience of such as massive job. | That only leaves smaller firms, who might have less expertise or experience of such as massive job. |
| The problem - as with the outsourcing sector - is that there are too few rivals, and thus less genuine choice. | The problem - as with the outsourcing sector - is that there are too few rivals, and thus less genuine choice. |
| Conservative MP Bernard Jenkin agrees that lessons need to be learned from the Carillion crisis. | Conservative MP Bernard Jenkin agrees that lessons need to be learned from the Carillion crisis. |
| Jenkin chairs the Public Accounts Committee, which announced an inquiry into the outsourcing of public services yesterday. | Jenkin chairs the Public Accounts Committee, which announced an inquiry into the outsourcing of public services yesterday. |
| Speaking on Channel 4 News, Jenkin says the government should “expand the pool of companies” which it awards contracts too. | Speaking on Channel 4 News, Jenkin says the government should “expand the pool of companies” which it awards contracts too. |
| The governments “preferred bidder system” makes the assumption, perhaps wrongly, that bigger companies are safer than smaller ones - Jenkin adds. | The governments “preferred bidder system” makes the assumption, perhaps wrongly, that bigger companies are safer than smaller ones - Jenkin adds. |
| Unions have warned the government that the “clock is ticking” for thousands of Carillion workers. | Unions have warned the government that the “clock is ticking” for thousands of Carillion workers. |
| The GMB says there are at least 8,473 Carillion private sector workers in the UK, whose jobs are vulnerable following the firm’s liquidation on Monday. | The GMB says there are at least 8,473 Carillion private sector workers in the UK, whose jobs are vulnerable following the firm’s liquidation on Monday. |
| GMB general secretary Tim Roache says the government must not “throw workers the wolves”. | GMB general secretary Tim Roache says the government must not “throw workers the wolves”. |
| Roache, who met business secretary Greg Clark this evening, says: | Roache, who met business secretary Greg Clark this evening, says: |
| “The clock is ticking for Carillion’s 8,500 private sector workers, and the Government must now offer them reassurance and financial guarantees. | “The clock is ticking for Carillion’s 8,500 private sector workers, and the Government must now offer them reassurance and financial guarantees. |
| “No worker should go hungry, default on a bill or miss a rent or mortgage payment because of a crisis they did not cause.” | “No worker should go hungry, default on a bill or miss a rent or mortgage payment because of a crisis they did not cause.” |
| The unions are worried because cabinet office minister David Lidington said yesterday that the government would only protect Carillion’s private sector contracts for 48 hours. That raised fears that jobs cut start being cut on Wednesday.... | The unions are worried because cabinet office minister David Lidington said yesterday that the government would only protect Carillion’s private sector contracts for 48 hours. That raised fears that jobs cut start being cut on Wednesday.... |
| Carillion’s collapse means the company’s workers and pensioners will soon be in the hands of the UK’s pension’s lifeboat. | Carillion’s collapse means the company’s workers and pensioners will soon be in the hands of the UK’s pension’s lifeboat. |
| The Pension Protection Fund is widely expected to take on Carillion’s pensions deficit, of around £580m. Those already taking pensions will be protected, but those members below retirement age will face cuts of 10-20%. | The Pension Protection Fund is widely expected to take on Carillion’s pensions deficit, of around £580m. Those already taking pensions will be protected, but those members below retirement age will face cuts of 10-20%. |
| The PPF has got the resources to cope. But my colleague Rupert Jones reports that its pockets are only so deep.... | The PPF has got the resources to cope. But my colleague Rupert Jones reports that its pockets are only so deep.... |
| The former pensions minister Steve Webb told the Guardian that “Carillion would be the biggest-ever hit on the PPF” but that the lifeboat would be able to “comfortably absorb” the Carillion scheme. | The former pensions minister Steve Webb told the Guardian that “Carillion would be the biggest-ever hit on the PPF” but that the lifeboat would be able to “comfortably absorb” the Carillion scheme. |
| Nigel Green, the chief executive of deVere Group, one of Britain’s biggest independent financial adviser firms, said: “UK final salary pension schemes have an enormous deficit black hole, which raises the inevitable question: how many more big hits can the PPF take?” | Nigel Green, the chief executive of deVere Group, one of Britain’s biggest independent financial adviser firms, said: “UK final salary pension schemes have an enormous deficit black hole, which raises the inevitable question: how many more big hits can the PPF take?” |
| The Carillion liquidation, he said, “should trigger alarm bells for pension savers across the UK”. | The Carillion liquidation, he said, “should trigger alarm bells for pension savers across the UK”. |