'Lessons not learned'

Carillion collapse two years on — hospitals unfinished and guilty unpunished

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Unite has warned that the government has failed to learn the lessons from the collapse of Carillion and that workers still face losing their jobs without warning and through no fault of their own due to rampant ‘bandit capitalism’.


Today (January 15) marks the second anniversary since the collapse of Carillion, the largest corporate failure in UK history.


Carillion’s collapse was not an isolated case — in the two years since the company’s implosion there have been several other high corporate failures including: Interserve, Valerie Patisserie and Thomas Cook, where a lack of effective regulation was a key feature in the various companies financial difficulties


When Carillion collapsed it had £7bn of liabilities. Its collapse resulted in thousands of workers losing their jobs and the taxpayer having to foot a bill for hundreds of millions of pounds (redundancy, costs of closing the company and additional costs for the hospitals) yet no one has been found guilty of any wrongdoing.


It is understood that a report by the National Audit Office into the manner that the government awarded contracts to Carillion is imminent.


There is also outstanding investigation by the Financial Reporting Council (FRC) which is examining Carillion’s audits and accounts dating as far back as 2013. This week the FRC admitted that the findings of an initial investigation will not be published until summer 2020.


A separate investigation by the Official Receiver is expected to report on how long Carillion was trading while insolvent and what action should be taken against the company’s directors, but this is not expected for at least another year.


Meanwhile delays continue to afflict the two flagship hospital projects where work ceased when Carillion collapsed.


The Royal Liverpool hospital in Liverpool which should have been completed in 2017 will not be completed until 2022.The hospital was supposedly 85 per cent complete when Carillion collapsed but due to a series of defects including problems with load bearing beams and unsafe exterior cladding, the hospital will cost £300 million to complete. The original budget for the hospital was £360 million.


Work on the half-finished Midland Metropolitan hospital, on the border of Birmingham and the Black Country, is yet to restart with the contract only having been recently awarded to Balfour Beatty with the Department of Health agreeing the funding just before Christmas. It is hoped that the hospital is operational prior to the Commonwealth Games in 2022, a delay of four years.


“The collapse of Carillion and other high profile corporate failures, has resulted in thousands of workers losing their jobs,” said Unite assistant general secretary Gail Cartmail. “In all these cases apparently healthy companies suddenly experienced financial problems and in several cases collapsed.


“The UK’s existing auditing and accounting system for major companies is clearly not fit for purpose and workers are suffering as a result,” she added. “Despite this the government which has many friends among the major accountancy firms, is proposing to do exactly nothing.


“The fact that no regulator has been able to complete an investigation into Carillion and some are still at least a year from completion is a scandal in itself.


“Despite the millions of pounds that the collapse of Carillion has cost the taxpayer not one single person has been found guilty of doing anything wrong.


“Until there is root and branch reform of how companies are allowed to operate in the UK and the way they are regulated workers will continue to be the innocent victims of bandit capitalism.”

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