Unions warn of further corporate meltdowns on anniversary of Carillion collapse

A year after the collapse of construction giant Carillion, two of the UK’s biggest unions have warned that the government inaction is putting jobs at risk and could result in future corporate meltdowns.

Carillion went into compulsory liquidation on 15 January 2018, with £7 billion of liabilities and just £29 million left in the bank. Experts believe that Carillion had been trading while insolvent for several years prior to its collapse.

Unions warn of further corporate meltdowns on anniversary of Carillion collapse

As a result of the company’s collapse nearly 3,000 of Carillion’s staff were made redundant with many other workers in the company’s supply chain also losing their jobs. Many of Carillion’s sub-contractors were also forced out of business.

Despite the scale of the collapse, trade union Unite said that no action has yet been taken against any the company’s directors or senior managers, despite longstanding investigations by the Financial Reporting Council (FRC) and the Insolvency Service.

The union claim the government has “rejected all calls” for substantial reforms to prevent similar collapses in future. Unite said the only noticeable change is the piloting of a policy that requires major outsourcing companies with public sector contracts in financial difficulties to produce a ‘living will’ to detail how services can continue to be run following a company’s demise.

Unite assistant general secretary Gail Cartmail said: “It is staggering that a year after the biggest corporate failure in modern UK history the government has carried on as though it is business as normal. The government’s failure to take action to ensure that there cannot be similar collapses in the future is a betrayal of workers, who still face being cast on the scrapheap without warning because of irresponsible directors who place profits and shareholder dividends before people.

“The fact that no one involved in Carillion has yet had any form of action taken against them, demonstrates either that the regulators are failing to do their jobs or that existing laws are too weak. If it is the latter then we need better stronger laws. Taxpayers were handed a bill of over £150 million to clean up the mess left by Carillion, yet the government has failed to end bandit capitalism in the UK.

“A year on from Carillion’s collapse the government needs to stop prevaricating and start taking effective action to drive bandit capitalism out of the UK.”

Britain’s general union GMB agreed that the government has not learned its lesson as new figures revealed the total value of outsourcing contracts let by the public sector rocketed by 53% in the past year.

In 2017/18 the lifetime value for the contracts captured by the Tussell database was £95 billion – up from £62bn the year before.

Capita was one of the biggest winners of public outsourcing, receiving contracts worth almost £1.4bn in 2017/18 - despite issuing a profit warning in the same year.

Meanwhile Interserve, which issued two profit warnings in just two months at the end of last year, scooped almost half a billion pounds worth of public contracts (£450m).

Rehana Azam, GMB national secretary, said: “What this shows is despite the tragic fiasco of Carillion, the government hasn’t learned its lesson.

“The Conservatives are hell bent on privatisation and outsourcing our public services - regardless of the consequences.

“What other explanation can there be for this huge increase on outsourced contracts in the year Carillion went bust and when other outsourcing giants look like they’re on life support?”

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