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LABOUR is demanding answers from the government over Carillion today after it handed public-service contracts worth £2 billion to the near-bankrupt blacklister.
Government officials were locked in last-ditch talks with the troubled construction giant yesterday in a bid to stave off its collapse.
But Labour has accused the government of continuing to pour taxpayers’ cash into the outsourcing firm, despite knowing it was heading for financial disaster.
Carillion, which employs 43,000 workers at home and abroad, is involved in major rail projects such as the HS2 high-speed development. It has contracts to provide school dinners, cleaning and catering at NHS hospitals and maintains 50,000 army-base homes for the Ministry of Defence.
But the firm faces a £900 million debt mountain and a pensions-fund deficit of £580 million, while its stock-market value has plummeted from £2bn to £61m.
Britain’s largest union Unite is also calling for an urgent inquiry into why Carillion, which was dishing out ever-rising dividend payments to its shareholders as recently as 2016, is on the verge of collapse.
Carillion hopes lenders will help bail it out, but the banks, headed by HSBC, Barclays and Santander, are understood to be unlikely to pour in new funding unless the government takes part in the bailout.
Carillion issued three official warnings last year that its profits were in danger and suspended its dividend jamboree, but, despite the warnings, the government continued to hand the firm public contracts.
Shadow cabinet office minister Jon Trickett said: “Alarm bells have been ringing for over six months about the state of Carillion’s finances.
“So the government must come forward and answer questions on exactly what due diligence measures were undertaken before awarding contracts to Carillion worth billions of taxpayers’ money.
“In the meantime, as emergency meetings take place between officials, employees of Carillion, pension-holders and taxpayers will want assurances that financial protections are in place in the event of the supplier experiencing further financial difficulties.
“Labour urges the government to stand ready to intervene and bring these crucial public-sector contracts back in-house.
“The government cannot outsource its responsibility and duty of care to these workers and vital public-sector projects.”
The government has failed to confirm if Carillion has been categorised as a “high risk” supplier and declined to comment on the rescue talks.
TUC deputy general secretary Paul Nowak said: "Tens of thousands of jobs are now at risk, along with vital public services and major infrastructure projects across the country.
"Workers, taxpayers and public service users could well be left to carry the can. Carillion is a textbook example of the failures of privatisation and outsourcing.”
Unite national officer Jim Kennedy said: “What is being discussed behind closed doors today has a real impact on each and every one of us.
“Public services, vast amounts of public money, thousands of jobs, including in a lengthy supply chain of insecure agency workers who are also at risk, and workers’ hard-saved pensions are all in danger of being dragged under by yet another bout of reckless corporate irresponsibility.
“There are also serious questions that need to be asked and answered about Carillion’s conduct.
“Of course, the best way to stop the public having to pick up the tab for these repeated private-sector failings is to take these contracts back in-house.”
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