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CONCERNS for the job safety of Carillion workers grew today when the company went into liquidation after the privateer’s cry for help was rejected by the government.
The construction and outsourcing giant had asked the government to provide funds of £20 million to help it secure more money from the banks to avoid liquidation, insiders reported.
But emergency Whitehall talks broke up this evening without a deal and Carillion’s compulsory liquidation was announced this morning.
Carillion’s fall has put thousands of jobs at risk, but Cabinet Office Minister David Lidington said staff should go to work as usual and would continue to be paid via the official receiver.
But all has not run smoothly. The RMT union reported that a train cleaner had filled up at a petrol station but their Carillion fuel card had bounced. RMT general secretary Mick Cash said that this was the start of a “brutal reality” facing the workers.
The group, which employs about 20,000 British workers and about the same overseas, has been struggling under £900m of debt and a £587m pension deficit. Many small firms are waiting for Carillion to pay bills going back several months.
Carillion has public-sector or public-private partnership contracts worth £1.7 billion. They include providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects and maintaining 50,000 army-base homes for the Ministry of Defence.
Shadow cabinet office minister Jon Trickett said: “The government must act quickly to bring these public-sector contracts back in-house to protect public services and ensure employees, supply chain companies, taxpayers and pension-fund members are protected.
Both Jim Kennedy from Unite and Aslef general secretary Mick Whelan have said a public inquiry into the collapse was needed to answer questions about Carillion’s conduct — it was declaring ever-rising profits and dishing out dividends to shareholders until last year — and the government’s recent decision to award it contracts despite indications of the company’s troubles.
Shadow business secretary Rebecca Long Bailey said there were “extreme concerns” with the government’s handling of the situation.
And Mr Trickett said: “Given £2bn worth of government contracts were awarded in the time three profit warnings were given by Carillion, a serious investigation needs to be launched into the government’s handling of this matter.
“It is vital that shareholders and creditors are not allowed to walk away with the rewards from profitable contracts while the taxpayer bails out loss-making parts of the business.”
Mr Lidington defended the government’s decision not to dish out more cash to the ailing firm, saying that the taxpayer “can’t be expected to bail out a private-sector company.”
But Public and Commercial Services Union general secretary Mark Serwotka took a wider view, saying: “Carillion is yet another example of the failings of privatisation.”
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