Carillion and Public Sector Outsourcing

Jim Cunningham Excerpts

Wednesday 24th January 2018 Commons Chamber

[Mr Lidington]

It is not possible to give an estimate because that will be a net figure that has to take into account both the willingness of joint venture partners to step forward and take over the projects in which they were involved—that seems to have been the case—and the speed at which the official receiver is able to find alternative contractors, or in-house contractors in certain cases, to take on the provision of particular public services. Our overall estimate can be only quite an uncertain estimate at this stage, but we are confident that it will in any case be very significantly less than if we had had to cope with the costs of an unplanned, unmanaged liquidation, had the Government not stepped forward and agreed to pay for the official receiver’s administrative and legal costs. Because of the funding we have provided, we have kept those public services running, and that has also provided a breathing space for private sector customers such as the Nationwide building society to continue receiving services while they decide how to react to the crisis.

[Mr Jim Cunningham (Coventry South) (Lab)]

The partners are going to take over the work, but who will fund it—the partners or the official receiver?

[Mr Lidington]

I am not sure whether the hon. Gentleman is referring to the partners involved in the special managers at PwC or to Carillion board members.

[Mr Cunningham]

I am referring to Carillion’s partners who were involved. They have an undertaking to take over the work, but who will pay the costs?

[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.