Carillion and Public Sector Outsourcing

Debate between Eleanor Smith and David Lidington

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.

Carillion

Debate between Eleanor Smith and David Lidington

Monday 15th January 2018 Commons Chamber

[Mr Lidington]

I am grateful to my right hon. Friend for his suggestions. I note that the Chair of the Public Administration and Constitutional Affairs Committee, my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), said today that his Committee is going to launch an inquiry into Government procurement. My right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) makes some important points about the need to have a look at how successive Governments have conducted the procurement process. I hope he will understand if I say that today, and in the immediate future, my wish is for Ministers and officials to focus above everything else on the continuity of the provision of public services and on doing all that we can to give help and reassurance to employees, subcontractors, suppliers and pension holders. There will be an occasion to return to some of the broader questions posed by my right hon. Friend.

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

This morning, the 400 employees who work in the Carillion headquarters in my constituency in Wolverhampton, along with many others, woke up to the news that Carillion had gone into liquidation. It probably felt like a bomb had hit them. The Minister says that the Government are going to give them support, but what type of support will that be? It is absolutely not enough to say that people can ring the jobcentre. What other futures are there for those employees? I seek an urgent meeting with the Minister to discuss this issue, because the headquarters are in my constituency. Will the Government commit to investigating why contracts continued to be handed to Carillion despite the company’s known difficulties?

[Mr Lidington]

On the hon. Lady’s last point, I responded at quite some length to similar points made by her Front-Bench colleague, the hon. Member for Hemsworth (Jon Trickett). The Government are, as I have said more than once in these exchanges, not only offering advice but paying the wages and salaries of people who are involved in the delivery of public services, until such time as the official receiver has found an alternative provider, whether in the public or private sector. I am happy for either I or another Minister in my Department to meet the hon. Lady to talk about her particular constituency concerns.