Carillion

Ronnie Cowan Excerpts

Thursday 12th July 2018 Commons Chamber

[Ronnie Cowan (Inverclyde) (SNP)]

Will the hon. Gentleman give way?

[Sir Bernard Jenkin]

I give way to my Committee colleague.

[Ronnie Cowan]

Given what the hon. Gentleman has just said, was he surprised as I was that, despite three profit warnings, despite hedge funds betting against its success and despite spiralling pension debt, the Government still handed out contracts to Carillion, including one to the tune of £1.4 billion for HS2?

[Sir Bernard Jenkin]

By that stage, the Government were in a Catch-22 situation. If they denied Carillion access to any public contracts, it would have been a further signal to the market that this company was going down and it would have put at risk all the other public sector contracts it held. Also, in that case, the risk was shared by two partner companies, which signed in blood that they would take over any risk of each or any of the companies going bust. The Government have not suffered any loss as a result of that contract.

[Ronnie Cowan]

What the hon. Gentleman is saying is typical of the attitude that Carillion was too big to fail—and not just with HS2; there was £158 million for Hestia with the Ministry of Defence and £62 million for electrification of the rail line from London to Corby. While the Government continued to give Carillion all those contracts, its suppliers must have been thinking, “Well, my money is safe here, too. If the Government believe in these big companies, I’m okay.” There is a knock-on effect, a domino effect, right the way through the process, and ultimately smaller companies suffered and failed.

[Sir Bernard Jenkin]

I totally agree with the concept that these contracts become too big to fail, and therefore, as I will explain, it becomes an illusion that the Government have transferred risk to these companies. These companies are a private sector extension of the public sector, and the public sector still carries the risk.