The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
I congratulate the hon. Member for Leeds West (Rachel Reeves) not just on securing this debate, but on her brilliant work in leading the Business, Energy and Industrial Strategy Committee. It has done exactly what a Select Committee should do, which is hold business to account, question the Government, find answers, and bring transparency and openness to this issue. I commend her work and that of the Chair of the Work and Pensions Committee for their joint efforts. They have produced a good document, and we will respond to it shortly. I also congratulate the Chair of the Public Administration and Constitutional Affairs Committee on that Committee’s diligent work in examining this issue in great detail, and on providing a huge amount of important information. The Government are considering the Committee’s detailed report, and we will respond to it in the near future.
None of us underestimates the huge impact of the collapse of Carillion. It was a huge shock, not just for the 18,000 people who worked for it, but for all the innocent contractors and small businesses that supplied it. The Government tried to respond to that collapse because the insolvency of Carillion had an impact on the lives of too many people. Our job was to put in place a response that was as swift, co-ordinated and comprehensive as possible, to ensure not just that we maintained the vital public services that Carillion was delivering to hospitals, schools, prisons and the Ministry of Defence up and down the country, but that we did all we could to protect those innocent contractors who were caught up in the Carillion collapse.
I believe we have been successful in mitigating the very serious impacts of the liquidation, and 12,345 jobs have been safeguarded so far—some 68% of the pre-liquidation workforce—compared with 2,404 redundancies. I recognise that 2,404 redundancies is a very serious matter for all those concerned but there can be no doubt that it is an unprecedented result for such a small number of people to have been made redundant, in comparison with the size of that business. That is testament to the efforts not just of Government, but of industry more widely, which ensured a speedy and positive response.
A total of 876 apprenticeships have been transferred to new employers so that those young people can continue to embark on their careers. At the request of the Secretary of State for Business, Energy and Industrial Strategy, the banks put together nearly £1 billion of support for those affected, including £100 million of enterprise finance guarantee from the taxpayer-owned British Business Bank.
However, it is also important that we learn the lessons of Carillion’s insolvency and ensure that we do everything in our power to avoid such an event happening again. The Government have taken steps to ensure that the causes of the insolvency will be fully investigated, and of course we are taking into account all the work that has been done by the Select Committees. I remind hon. Members that the investigations that have already commenced include those by the official receiver, the Financial Reporting Council, as requested by the Secretary of State for Business, Energy and Industrial Strategy, and the Financial Conduct Authority.
The official receiver has powers to obtain information and, if misconduct is proven, can recover assets, pursue disqualification proceedings or refer the case for prosecution if criminality is discovered. The Financial Reporting Council has also commenced an investigation into the actions of two finance directors of Carillion and the conduct of KPMG as Carillion’s auditors. We are determined to get to the bottom of this. The Secretary of State has also recruited the eminent Sir John Kingman to undertake a thorough review of the FRC to ensure that it is doing exactly what it should be in order to be a robust and effective regulator. We are giving Sir John all the support he needs to conduct that thorough investigation. The Financial Conduct Authority is investigating whether Carillion manipulated financial statements prior to July 2017 and it is also considering allegations of insider trading.
I reassure the House that the Government are committed to ensuring that the insolvency is thoroughly investigated. Tens of thousands of documents are being considered and we will ensure that we get to the truth. The Government are also committed to ensuring that we learn the lessons. First, we are tackling the problem of late payments. It is clear that payment terms beyond 60 days are unacceptable in the vast majority of cases. Last year, we introduced the payment reporting regulations, which require the UK’s largest firms to report on their payment policies and payment performance every six months. The hon. Member for Sefton Central (Bill Esterson) said that, under a future Labour Government, everyone would be paid on time—my concern is that nobody would be paid if there were a Labour Government.
We want to provide transparency in payment practices, ensuring that small and medium-sized enterprises have more information about large firms that they are considering doing business with. My hon. Friend the Minister for Implementation has overseen a consultation on how we can take the payment performance of Government suppliers into account when awarding major contracts, which is one of the things the hon. Member for Leeds West was concerned about. We have issued a call for evidence on how we can end the scourge of late payments.
Secondly, in relation to how the Government manage their key suppliers, my right hon. Friend the Chancellor of the Duchy of Lancaster set out in his speech on 25 June how we would do that, including introducing effective contingency plans; introducing a playbook of guidelines, rules and principles; and requiring suppliers to publish key performance indicators on our more important contractors.
Thirdly, in relation to corporate governance, my Department is implementing new regulations relating to executive pay—that was mentioned in the debate—and bringing in extra transparency and accountability in the way executive pay at listed companies is handled. We are consulting on reform of the insolvency and corporate governance regime, including on important areas such as the framework within which companies determine dividend payments and strengthening shareholder stewardship.
The hon. Member for Leeds West raised the issue of what she called the Government’s prompt payment code. I just remind her that that code is a voluntary, industry-led code of practice that enables businesses to demonstrate to suppliers that they are committed to prompt payment. Of course it needs reform and improvement, but it is industry-led.
I can assure the House that the Government are determined to learn the lessons of the insolvency of Carillion and put in place a regime that protects shareholders, workers and all those businesses connected in the supply chain.