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

Highways jobs

Service Manager – Network Management

Somerset County Council
£46,122 per annum
A number of exciting permanent opportunities have arisen to drive forward further improvements to our traffic related services. Somerset
Recuriter: Somerset County Council

Principal Traffic Control Engineer

Somerset County Council
£33,799 to £37,849 per annum
A number of exciting permanent opportunities have arisen to drive forward further improvements to our traffic related services. Somerset
Recuriter: Somerset County Council

Assistant Engineer

Bedford Borough Council
£31,371 - £32,878 per annum
Bedford is growing at a fast pace and we are investing heavily in our highways infrastructure. Bedford, Bedfordshire
Recuriter: Bedford Borough Council

Senior Clerk of Works

Bedford Borough Council
£27,905 - £30,507 + market rate supplement £2,630 per annum
Bedford is growing at a fast pace and we are investing heavily in our highways infrastructure. Bedford, Bedfordshire
Recuriter: Bedford Borough Council

Senior Technician

Bedford Borough Council
£27,905 - £30,507 per annum
Bedford is growing at a fast pace and we are investing heavily in our highways infrastructure. Bedford, Bedfordshire
Recuriter: Bedford Borough Council

Local Government News

Latest issue - Local Goverrnemnt News

The June issue of Local Government News contains the full details of all the winning schemes in the 2019 Street Design Awards. From Children's Play to Pedestrian Environment, find out who has been recognised for their innovation and use of best practice.

This issue also explores how local government pension funds can hedge currency risk, how councils can best address the shortfall in school places, and an update on the number of authorities banning the use of Roundup over safety fears.

Register for your free magazine