Carillion and Public Sector Outsourcing

Eleanor Smith Excerpts

Wednesday 24th January 2018 Commons Chamber

[Mr Lidington]

Administrative costs fell to the official receiver in the short term. With the HS2 contracts, for example, there was an obligation on the partners to step forward and meet the Carillion’s obligations at the cost that they, collectively as a consortium, had negotiated and agreed with the Government. That contract was with the consortium as an entity. I hope that answers the hon. Gentleman’s question.

Nationwide building society has since offered jobs to 250 Carillion employees and contracts to the subcontractors that employ a further 1,500 people. In total, more than 90% of Carillion’s private sector facilities management service customers have indicated that they will provide funding through the official receiver to maintain interim services while new suppliers can be identified to deliver them, ensuring the retention and employment of staff on those contracts.

[Eleanor Smith (Wolverhampton South West) (Lab)]

TUPE does not apply when a company goes insolvent, but given the way in which Carillion collapsed, should not the Government make an exception and allow TUPE to apply to private sector employees?

[Mr Lidington]

PwC, as the special managers working with the official receiver, is looking at such cases to see whether it can offer arrangements whereby workers are no worse off than they were under the terms of their Carillion employment. The hon. Lady and I met yesterday to talk about the constituency concerns that she and other parliamentary colleagues have about the Wolverhampton headquarters. The alternative of a chaotic, unmanaged collapse and liquidation of Carillion would have been far more difficult for the workers concerned, because the liquidator in those circumstances would have had a statutory obligation to terminate all contracts and lay off all workers straight away, not to continue with the provision of public services. That would have been more costly not only for the individuals involved but, obviously, for the public purse.

I welcome the initiative taken last week by the Construction Industry Training Board to help the 1,400 apprentices employed by Carillion. Those apprenticeships were primarily in bricklaying, carpentry and joinery—skills that the country vitally needs to build homes and solve our national housing shortage. To date, the CITB has matched 400 of those apprentices with new employers, and it continues to assess the large number of industry offers it has received to find placements for the remaining Carillion apprentices.

Unfortunately, there will be some redundancies as a result of this company failure. That is why Jobcentre Plus mobilised its rapid response service, and it stands ready to support any employee, at any stage, who is affected by this announcement. I am aware, too, that a significant number of small and medium-sized businesses—either suppliers to or subcontractors of Carillion—will be affected by this collapse because Carillion owed them money. We are doing what we can to keep continuity on service contracts for those companies, and as I said earlier, we are having some success, particularly on the facilities management side.

In addition, we are looking to restart work on construction sites at the earliest safe moment. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy, with the assistance of my the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton (Andrew Griffiths), who has responsibility for small business, has personally led efforts to do what we can to mitigate the risks to subcontractors and suppliers through a taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation on the sector through practical measures that will help SMEs and employees alike. My right hon. Friend has met the banks, and I join him in welcoming their undertakings to take special measures to help those affected, including overdraft extensions, payment holidays and fee waivers.