Chris Ames 07 June 2018

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

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

SIGN UP
For your free daily news bulletin
Highways jobs

Assistant Highways Officer

Lincolnshire County Council
£21,269 - £23,953
Lincolnshire County Council is looking to recruit an Assistant Highways Officer Lincoln, Lincolnshire
Recuriter: Lincolnshire County Council

Highways Officer

Lincolnshire County Council
£26,466 - £29,174
Lincolnshire County Council is looking to appoint a Highways Lincolnshire
Recuriter: Lincolnshire County Council

Social Worker - Children in Care

Essex County Council
£32787 - £44826 per annum + + Free On-Site Parking & Benefits Package
Closing Date
Recuriter: Essex County Council

Newly Qualified Social Workers - Children in Care

Essex County Council
£32787 - £44826 per annum + + Free On-Site Parking & Benefits Package
These positions are open to Newly Qualified Social Workers (NQSW's) and Experienced Social Workers. The starting salary for a NQSW is £29,236 per a England, Essex, Basildon
Recuriter: Essex County Council

Assistant Project Manager

Essex County Council
£31200 - £36763 per annum
Assistant Project ManagerFixed Term, 12 monthsFull Time, 37 hours per weekUp to £36,763 per annumLocation
Recuriter: Essex County Council

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.