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Fri October 19 2018

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Union tallies public cost of Carillion collapse

26 Sep It has emerged that taxpayer-funded redundancy payments to former Carillion staff are set to reach £65m.

When the costs of accountants and lawyers are factored in, and bailing out unfinished projects, the total bill to the tax-payer could reach as much as £250m.

The Unite union made a Freedom of Information request to the Insolvency Service that revealed that the Redundancy Payments Office (RPO) has so far paid £50m to former Carillion staff and is expecting the total to reach approximately £65m.

As Carillion collapsed into compulsory liquidation, rather than enter a managed form of administration, the vast majority of the company’s 19,000 staff had to be made redundant and were then entitled to make a claim for redundancy, from the (RPO).

Accountancy firm PwC, engaged by the Insolvency Service to wind up Carillion’s affairs, has been widely reported as making around £50m in fees. As Carillion had just £29m left in the bank when it met its demise, much of PwC’s bill will be picked up by the taxpayer.

Various law firms are understood to have been equally busy on similar fee scales.

Then there is the cost to the taxpayer for finishing Carillion's stranded projects, like the Midlands Metropolitan Hospital in Sandwell, which the government has already confirmed it will bail out, and the Royal Liverpool Hospital, on which a deal is expected imminently. The cost of concluding these projects is expected to be in excess of £100m.

There are also costs associated with the various investigations by the Financial Reporting Council, the Financial Conduct Authority and the National Audit Office, none of which come cheap.

Unite assistant general secretary Gail Cartmail told the Labour party conference this week: “These latest figures demonstrate that the taxpayers have had to pick up the tab for the greed and recklessness which led to Carillion’s collapse. While the directors and senior executives of Carillion have largely slithered off into lucrative new roles it is the taxpayers who have been left to pick up the pieces from their mess.

 “These revelations further underline why the government must order a full public inquiry into Carillion’s collapse to not only understand who was responsible for the greatest corporate failure in UK history but also the total cost to the taxpayer.”

MPU

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