Government warned of public services ‘crisis’ amid Carillion collapse fears

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The Government is being urged to bring contracts from construction giant Carillion back into public control amid fears it could “collapse”.

The company is a major supplier to the Government and has contracts in the rail industry, education and NHS.

It has met lenders to discuss options to reduce debts, recapitalise and/or restructure the group’s balance sheet.

Carillion has struggled since reporting half-year losses of £1.15 billion., and a meeting is being held on Friday to discuss its pensions deficit.

Shadow business secretary Rebecca Long-Bailey said: “The collapse of Carillion could provoke a serious crisis.

“It would have major implications for the outsourced government contracts the company holds, as well as the firm’s thousands of workers, those in the supply chain and those who rely on Carillion’s pension fund.

“The Government, who, despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services.”

Mick Cash, general secretary of the Rail, Maritime and Transport (RMT) union, said: “The union’s absolute priority at this stage is our members’ jobs and their pension rights.

“The workers caught in the middle of this financial meltdown at Carillion are not responsible for the crisis and they should have protection and guarantees from the Government, including an assurance that operations will be directly transferred over to Network Rail with all jobs, pensions and rights safeguarded if Carillion goes bust.

“RMT has been through a similar situation to this with the collapse of both Metronet on London Underground and Jarvis on the railways.

“This is the high-risk gamble you take with handing infrastructure over to speculative private companies, and the workers caught in the crossfire must be protected and ministers must take immediate responsibility for giving those assurances without any prevarication.”

Unite union assistant general secretary Gail Cartmail said: “The Government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house.

“If taxpayers’ money is used to fund corporate mismanagement, then the Government should be looking to ensure that public sector contracts are brought back in-house at the earliest possible opportunity.

“If the Government is forced to institute a rescue package, they need to also ensure that the supply chain is fully protected as many of these workers lack even the protection of basic employment rights, as they are employed on a bogus self-employed basis, through agencies and via umbrella companies.”

A Government spokeswoman said: “Carillion is a major supplier to the Government, with a number of long-term contracts.

“We are committed to maintaining a healthy supplier market and work closely with our key suppliers.

“The company has kept us informed of the steps it is taking to restructure the business.

“We remain supportive of their ongoing discussions with their stakeholders and await future updates on their progress.”

The Pensions Regulator said it was not commenting on whether or not it was attending specific meetings, but a spokesman said: “We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded.

“We will not comment further unless it becomes appropriate to do so.”

A spokeswoman for Carillion said they met creditors on Wednesday but would not comment on reports of further talks.

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