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You can find the current article at its original source at https://www.theguardian.com/business/live/2018/jan/15/carillion-crisis-liquidation-last-ditch-talks-fail-business-live
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| Carillion liquidation: Jeremy Corbyn vows to end 'rip-off' privatisations - live updates | Carillion liquidation: Jeremy Corbyn vows to end 'rip-off' privatisations - live updates |
| (35 minutes later) | |
| There are alarming signs tonight that some Carillion contractors may already be cutting staff. | |
| My colleague Simon Goodley explains: | |
| A worker on the new Midland Metropolitan hospital building 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.” | |
| More here: | |
| Labour leader Jeremy Corbyn is calling for fundamental changes in the way public services are delivered in the UK, following the liquidation of Carillion. | Labour leader Jeremy Corbyn is calling for fundamental changes in the way public services are delivered in the UK, following the liquidation of Carillion. |
| In a video message, Corbyn vowed to end the “PFI rip-off”, end the dogma that “private-profit-is-best” and run Britain’s public services “for the benefit of the many, not the profits of the few”. | In a video message, Corbyn vowed to end the “PFI rip-off”, end the dogma that “private-profit-is-best” and run Britain’s public services “for the benefit of the many, not the profits of the few”. |
| The Opposition leader says: | The Opposition leader says: |
| In the wake of the collapse of the contractor Carillion, it is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced the public of billions of pounds. | |
| This is a watershed moment. | This is a watershed moment. |
| In the two-minute statement, Corbyn cites the “£2bn public bailout of Richard Branson’s Virgin and Stagecoach for their own failure to run East Coast rail properly”, as further proof that outsourcing is a flawed model. | In the two-minute statement, Corbyn cites the “£2bn public bailout of Richard Branson’s Virgin and Stagecoach for their own failure to run East Coast rail properly”, as further proof that outsourcing is a flawed model. |
| He continues: | He continues: |
| “Staff and patients in our NHS are facing shocking conditions this winter. Tory underfunding has caused the crisis, but privatisation, outsourced contracts and profiteering has made it worse. | “Staff and patients in our NHS are facing shocking conditions this winter. Tory underfunding has caused the crisis, but privatisation, outsourced contracts and profiteering has made it worse. |
| “Our public services – health, rail, prisons, even our Armed Forces’ housing – are struggling after years of austerity and private contractors siphoning off profits from the public purse. | “Our public services – health, rail, prisons, even our Armed Forces’ housing – are struggling after years of austerity and private contractors siphoning off profits from the public purse. |
| “It’s time we took back control. We not only need to guarantee the public sector takes over the work Carillion was contracted to do – but go much further and end contracts where costs spiral, profits soar and services are hollowed out. | “It’s time we took back control. We not only need to guarantee the public sector takes over the work Carillion was contracted to do – but go much further and end contracts where costs spiral, profits soar and services are hollowed out. |
| Jeremy Corbyn says the collapse of #Carillion is a “watershed moment”, adding: “it is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced the public of billions of pounds." | Jeremy Corbyn says the collapse of #Carillion is a “watershed moment”, adding: “it is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced the public of billions of pounds." |
| Over in the House of Lords, a former Conservative chancellor has backed calls for an inquiry into Private Finance Initiative (PFI) contracts in the aftermath of Carillion’s demise. | Over in the House of Lords, a former Conservative chancellor has backed calls for an inquiry into Private Finance Initiative (PFI) contracts in the aftermath of Carillion’s demise. |
| Lord Lawson told fellow peers he “refused to have anything to do with it [PFI]” when in office in the 1980s even though Treasury officials were keen on it. | Lord Lawson told fellow peers he “refused to have anything to do with it [PFI]” when in office in the 1980s even though Treasury officials were keen on it. |
| PA has more details: | PA has more details: |
| Subsequent chancellors, especially Labour’s Gordon Brown, were “enthusiastically in favour of it”, Lawson continued, because it enabled ministers in the short term to “dress up” considerable amounts of public expenditure off the public sector balance sheet. | Subsequent chancellors, especially Labour’s Gordon Brown, were “enthusiastically in favour of it”, Lawson continued, because it enabled ministers in the short term to “dress up” considerable amounts of public expenditure off the public sector balance sheet. |
| He said this was not a good reason for something which did not give good value for money for the taxpayer and introduced “a degree of moral hazard which we see very much in the Carillion affair”. | He said this was not a good reason for something which did not give good value for money for the taxpayer and introduced “a degree of moral hazard which we see very much in the Carillion affair”. |
| Lord Lawson said it was important to “take stock and decide whether the whole PFI initiative should be proceeded with any further” because there was enough evidence to show it was not good value for money or sensible for the taxpayer. | Lord Lawson said it was important to “take stock and decide whether the whole PFI initiative should be proceeded with any further” because there was enough evidence to show it was not good value for money or sensible for the taxpayer. |
| Education minister Nick Gibb is also attending the ministerial meeting - understandably, as Carillion provides services, such as meals, to 230 schools. | Education minister Nick Gibb is also attending the ministerial meeting - understandably, as Carillion provides services, such as meals, to 230 schools. |
| We’re expecting to hear details of the meeting later this evening. | We’re expecting to hear details of the meeting later this evening. |
| Over in Whitehall, government ministers are discussing the Carillion crisis at the Cabinet Office. | Over in Whitehall, government ministers are discussing the Carillion crisis at the Cabinet Office. |
| Chancellor Philip Hammond is there. As he arrived, journalists asked whether taxpayers could suffer losses from the company’s collapse, but he didn’t answer. | Chancellor Philip Hammond is there. As he arrived, journalists asked whether taxpayers could suffer losses from the company’s collapse, but he didn’t answer. |
| The Press Association focuses on the news that Carillion’s top executives are being investigated over their conduct (as covered earlier in this blog).... | The Press Association focuses on the news that Carillion’s top executives are being investigated over their conduct (as covered earlier in this blog).... |
| Here’s a flavour: | Here’s a flavour: |
| CARILLION BOSSES TO BE INVESTIGATED OVER COMPANY’S COLLAPSE | CARILLION BOSSES TO BE INVESTIGATED OVER COMPANY’S COLLAPSE |
| Top bosses at Carillion are to be investigated after the construction firm’s collapse put thousands of jobs at risk and saw the Government heavily criticised for its role in the debacle. | Top bosses at Carillion are to be investigated after the construction firm’s collapse put thousands of jobs at risk and saw the Government heavily criticised for its role in the debacle. |
| A last ditch plea from Carillion to the Government to provide it with a 20 million lifeline fell on deaf ears over the weekend, triggering a compulsory liquidation to be overseen by PwC. | A last ditch plea from Carillion to the Government to provide it with a 20 million lifeline fell on deaf ears over the weekend, triggering a compulsory liquidation to be overseen by PwC. |
| Carillion has public sector or public/private partnership contracts worth £1.7bn, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence. | Carillion has public sector or public/private partnership contracts worth £1.7bn, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence. |
| But it has seen its shares price plunge more than 70% in the past six months after issuing a string of profit warnings and breaching its financial covenants. | But it has seen its shares price plunge more than 70% in the past six months after issuing a string of profit warnings and breaching its financial covenants. |
| The group, which employs around 20,000 British workers, has been struggling under £900m of debt and a £587m pension deficit. | The group, which employs around 20,000 British workers, has been struggling under £900m of debt and a £587m pension deficit. |
| David Lidington, the Cabinet Office minister, told Parliament on Monday afternoon that the Official Receiver will now investigate the role of the company’s former and current directors in its collapse, warning they could face “severe penalties”. | David Lidington, the Cabinet Office minister, told Parliament on Monday afternoon that the Official Receiver will now investigate the role of the company’s former and current directors in its collapse, warning they could face “severe penalties”. |
| Government minister Oliver Dowden has told Channel 4 News that Carillion staff should keep clocking on, despite the huge uncertainty over their future. | Government minister Oliver Dowden has told Channel 4 News that Carillion staff should keep clocking on, despite the huge uncertainty over their future. |
| Now on Channel 4 News: "This is a regrettable situation and we urge all employees to turn up for work. The government is working to supply all the support they can" Cabinet Office minister Oliver Dowden on #Carillion crisis. pic.twitter.com/fEGAoVnpTU | Now on Channel 4 News: "This is a regrettable situation and we urge all employees to turn up for work. The government is working to supply all the support they can" Cabinet Office minister Oliver Dowden on #Carillion crisis. pic.twitter.com/fEGAoVnpTU |
| Carillion’s lurch into liquidation shows “the consequences of corporate greed”, says the Guardian’s editorial tonight. | Carillion’s lurch into liquidation shows “the consequences of corporate greed”, says the Guardian’s editorial tonight. |
| Solving this culture requires short-term, and long-term, answers, we say. | Solving this culture requires short-term, and long-term, answers, we say. |
| The immediate steps are obvious: a full investigation into the liquidation (City regulators have questions too). But Carillion’s failure is much more than that. It is the collapse of an idea that has held for 30 years. | The immediate steps are obvious: a full investigation into the liquidation (City regulators have questions too). But Carillion’s failure is much more than that. It is the collapse of an idea that has held for 30 years. |
| Outsourcing public sector contracts wasn’t just a doctrinaire response to high levels of borrowing. It was also because Whitehall was not very good at it. That makes wholesale renationalisation, not least in a Whitehall stretched to breaking point by Brexit, extremely unlikely. This is a crisis that has been looming for years. | Outsourcing public sector contracts wasn’t just a doctrinaire response to high levels of borrowing. It was also because Whitehall was not very good at it. That makes wholesale renationalisation, not least in a Whitehall stretched to breaking point by Brexit, extremely unlikely. This is a crisis that has been looming for years. |
| There is no simple fix. But encouraging more, smaller businesses to secure contracts, better corporate behaviour and perhaps a single outsourcing regulator will all be part of an answer. | There is no simple fix. But encouraging more, smaller businesses to secure contracts, better corporate behaviour and perhaps a single outsourcing regulator will all be part of an answer. |
| The Guardian view on Carillion: reaping the consequences of corporate greed | The Guardian view on Carillion: reaping the consequences of corporate greed |
| Our financial editor, Nils Pratley, has lambasted Carillion’s management for not doing a more competent job: | Our financial editor, Nils Pratley, has lambasted Carillion’s management for not doing a more competent job: |
| Responsibility for Carillion’s collapse lies in the boardroom. It is the job of the directors to manage risk and the eight pages of Carillion’s last annual report devoted to the subject clearly only scratched the surface. | Responsibility for Carillion’s collapse lies in the boardroom. It is the job of the directors to manage risk and the eight pages of Carillion’s last annual report devoted to the subject clearly only scratched the surface. |
| Chairman Philip Green should have spent less time wondering about the long-terms risks from Brexit and more time addressing the upfront and present dangers from cost over-runs on three big jobs: new hospitals in Liverpool and Smethwick plus the Aberdeen bypass. | Chairman Philip Green should have spent less time wondering about the long-terms risks from Brexit and more time addressing the upfront and present dangers from cost over-runs on three big jobs: new hospitals in Liverpool and Smethwick plus the Aberdeen bypass. |
| The walk-on role played the auditors, KPMG, will go under the Financial Reporting Council’s microscope in due course. But the hard fact is that Carillion directors were boasting in March last year of having “substantial liquidity with some £1.5bn of available funding” yet the company ran out of money 10 months later. | The walk-on role played the auditors, KPMG, will go under the Financial Reporting Council’s microscope in due course. But the hard fact is that Carillion directors were boasting in March last year of having “substantial liquidity with some £1.5bn of available funding” yet the company ran out of money 10 months later. |
| That suggests delusion in the boardroom on a grand scale. Hedge funds, looking from outside and betting on the shares going south, seem to have had a better grasp of Carillion’s financial distress than the insiders.... | That suggests delusion in the boardroom on a grand scale. Hedge funds, looking from outside and betting on the shares going south, seem to have had a better grasp of Carillion’s financial distress than the insiders.... |
| More here: | More here: |
| If you’re just tuning in, here’s Reuters’ latest story about the Carillion crisis. | If you’re just tuning in, here’s Reuters’ latest story about the Carillion crisis. |
| Britain will pay Carillion’s private sector workers for 48 hours: minister | Britain will pay Carillion’s private sector workers for 48 hours: minister |
| Britain will pay Carillion workers on private sector contracts for 48 hours after the infrastructure firm’s collapse but will not offer them the same protection as those in the public sector, the minister handling the liquidation said on Monday. | Britain will pay Carillion workers on private sector contracts for 48 hours after the infrastructure firm’s collapse but will not offer them the same protection as those in the public sector, the minister handling the liquidation said on Monday. |
| The government is paying the salaries of Carillion’s workers after it collapsed on Monday, but Cabinet Office minister David Lidington said that those private companies employing Carillion would have only two days of government support. | The government is paying the salaries of Carillion’s workers after it collapsed on Monday, but Cabinet Office minister David Lidington said that those private companies employing Carillion would have only two days of government support. |
| “The position of private sector employees is that they will not be getting the same protection that we’re offering to public sector employees, beyond a 48-hour period of grace,” Lidington told lawmakers in parliament. | “The position of private sector employees is that they will not be getting the same protection that we’re offering to public sector employees, beyond a 48-hour period of grace,” Lidington told lawmakers in parliament. |
| He said the move would “give time for the private sector counterparties to Carillion to decide whether they want to accept termination of those contracts, or themselves to pay for the ongoing costs.” | He said the move would “give time for the private sector counterparties to Carillion to decide whether they want to accept termination of those contracts, or themselves to pay for the ongoing costs.” |
| He added: | He added: |
| “I think that is a reasonable gesture towards private sector employees.” | “I think that is a reasonable gesture towards private sector employees.” |
| Britain will pay Carillion's private sector workers for 48 hours: minister https://t.co/o1U1WW3s26 pic.twitter.com/oqwuM3mFbe | Britain will pay Carillion's private sector workers for 48 hours: minister https://t.co/o1U1WW3s26 pic.twitter.com/oqwuM3mFbe |
| This must have been a very rough day for Carillion’s 45,000 workers, including around 20,000 in the UK. | This must have been a very rough day for Carillion’s 45,000 workers, including around 20,000 in the UK. |
| Work has continued at some sites, as these photos show: | Work has continued at some sites, as these photos show: |
| I’m afraid I missed Labour MP Chi Onwurah’s question to David Lidington; fortunately she’s just tweeted a clip: | I’m afraid I missed Labour MP Chi Onwurah’s question to David Lidington; fortunately she’s just tweeted a clip: |
| Tories have betrayed Newcastle twice over Carillion, told them to commit to supporting jobs, pensions and our economy - a helpline won't cut it. pic.twitter.com/0Gm0bAUCwS | Tories have betrayed Newcastle twice over Carillion, told them to commit to supporting jobs, pensions and our economy - a helpline won't cut it. pic.twitter.com/0Gm0bAUCwS |
| It’s official: Carillion haven’t cut any staff today. | It’s official: Carillion haven’t cut any staff today. |
| Liquidator confirms no one has been dismissed from Carillion. “Everyone is still on the payroll”. Including, it would appear, former CEO Richard Howson. Howson left last year but company is still paying his salary (£660,000) and benefits (£28,000) until October. | Liquidator confirms no one has been dismissed from Carillion. “Everyone is still on the payroll”. Including, it would appear, former CEO Richard Howson. Howson left last year but company is still paying his salary (£660,000) and benefits (£28,000) until October. |