Chris Ames 07 June 2018

Carillion collapse to cost taxpayer £148m, spending watchdog warns

Carillion collapse to cost taxpayer £148m, spending watchdog warns image

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.’

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.’

A longer version of this article first appears on Transport Network

Unjust enrichment?  image

Unjust enrichment?

Housing authorities should take care when relying upon valuations that will feed into section 125 notices, says Amy Rogers, of the disputes team at Cripps.
Highways jobs

Head of Audit and Governance

Tamworth Borough Council
Up to £49k + £5000 shared service allowance
Looking for people who are excellent communicators, are adventurous and who are inspired by our values... Tamworth, Staffordshire
Recuriter: Tamworth Borough Council

Divisional Manager – Revenues, Benefits & Customer services

Chichester District Council
£51,354 to £55,167
We are looking for an exceptional candidate to lead the Revenues, Benefits & Customer Services division. Chichester, West Sussex
Recuriter: Chichester District Council

Senior Team Leader

Redbridge London Borough Council
£35,992 to £38,994 per annum inclusive
Looking for individuals with initiative, evidence of experience in managing a street cleansing service and motivating... Redbridge, London (Greater)
Recuriter: Redbridge London Borough Council

Residential Keyworker

London Borough of Richmond upon Thames and London Borough of Wandsworth
£19,156 per annum
This is an exciting time to join the school. In our recent OFSTED of the residential department. London (Greater)
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Commissioning Manager

Camden London Borough Council
£40,829 - £47,360 per annum
Looking for an ambitious person who can communicate well and understands how to analyse and translate qualitative and... Camden, London (Greater)
Recuriter: Camden London Borough Council

Local Government News

Latest issue - Local Goverrnemnt News

The March issue of Local Government News explores alternative funding channels that are available to councils beyond the Public Works Loan Board, what hurdles merging councils face in coming together, and how local government is handling GDPR.

This issue also has a special highways and street lighting section exploring how councils can use lighting to embark on their smart city journey and using IoT technology to weather the storm.

Register for your free magazine