The government was informed of a plan to retrieve more than £360m from Carillion – helping to shield the public purse from the cost of the firm’s collapse and preventing losses to workers’ pensions – but refused to pressure directors into implementing it.
The Cabinet Office, which oversees government contractors, neglected to attempt to push Carillion’s disgraced leadership into acting on the proposal when it was raised by accountancy company EY in December last year.
EY recommended breaking the company up, selling the profitable divisions and liquidating the rest, thereby avoiding an uncontrolled collapse.
EY said the move would have generated £364m, with £218m being funnelled into Carillion’s pensions blackhole, estimated to be at least £1bn.
The restructure would have helped safeguard the retirement funds of some of the 27,500 workers affected by the disaster and lowered costs to the taxpayer, now stretching into hundreds of millions of pounds, incurred because of the involuntary liquidation.
A spokesperson for the former directors – who continued to hand themselves massive amounts of cash even as they presided over the firm’s implosion – said they rejected the plan in the hope of turning the company round.
According to the Guardian, the Cabinet Office was aware of EY’s proposal but refused to attempt to pressure Carillion’s executives into accepting it.
The Cabinet Office confirmed it knew of the plan but declined to comment on its response.
Shadow minister for business Jon Trickett accused the government of being “asleep on the job” and having “a blind ideological commitment to outsourcing”.
Carillion public inquiry call
Unite assistant general secretary Gail Cartmail said the government’s catalogue of failures in regards to Carillion is “growing by the day”.
“By failing to ensure an orderly break up of Carillion they have cost the taxpayer millions of pounds in insolvency costs and redundancy payments,” said Cartmail.
“It also meant that sub-contractors continued to provide goods and services to Carillion which they will never be paid for which has resulted in workers losing their jobs and companies going to the wall.
“This is yet another reason why we need a full public inquiry into Carillion’s collapse so that all the relevant information is placed in the open and those responsible for this terrible mess are named and shamed.”
Royal Liverpool Hospital
Meanwhile, it has emerged that anti-union firm Laing O’Rourke is the favourite to replace Carillion as the main contractor on the stalled Liverpool Royal Hospital development.
Laing O’Rourke was the main contractor on the Alder Hey hospital project in Liverpool. During this project it refused to allow unions access to the workforce and barred the appointment of union safety representatives.
In the space of a fortnight in 2014 there were five accidents on the Alder Hey site including broken limbs and a worker suffering a crushed pelvis.
Other problems included the refusal to allow known trade union members to work on the site and the extensive use of bogus self-employed labour.
Cartmail said, “Workers on the hospital project have been in the frontline of Carillion’s collapse. It is now imperative that a new contractor ensures that workers’ rights are protected and the highest safety levels adhered to.
“It would be a disgrace if this flagship project was completed by a company boosting its profits by exploiting workers, ignoring workplace rights and cutting corners on safety.
“We will be working with local representatives to ensure our concerns are listened to, and further delays to the project are avoided.”