Image copyright Carillion

Construction giant Carillion has gone into liquidation, threatening thousands of jobs.

The move came after talks between the firm, its lenders and the government failed to reach a deal to save the UK's second biggest construction company.

Carillion ran into trouble after losing money on big contracts and running up huge debts of around £1.5bn.

Its failure means the government will have to provide funding to maintain the public services run by Carillion.

Media playback is unsupported on your device Media caption David Lidington says wages will be paid to staff working on public sector contracts

"All employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do," said government minister David Lidington.

Carillion is involved in major projects such as the HS2 high-speed rail line, as well as managing schools and prisons.

It is the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.

Defence Secretary Gavin Williamson told MPs there would be a meeting of the government's Cobra emergency committee on Monday to discuss the situation.

Carillion chairman Philip Green said it was a "very sad day" for the company's workers, suppliers and customers.

The company has 43,000 staff worldwide - 20,000 in the UK.

Media playback is unsupported on your device Media caption Labour asks why the government did not act when profit warnings were issued

There are also thousands of small firms that carry out work on Carillion's behalf - many of those have contacted the BBC with concerns about whether they will be paid.

One company, which provided services for Carillion's prisons contract, told the BBC that it might fail if it is not paid the £80,000 owed to it.

A worker on the Midland Metropolitan Hospital, who wanted to only be identified as Philip, told the BBC: "Everyone on the site got told: 'That's it, go home.' My company said, 'You've been laid off.'

"They've literally locked the gate. They've told us we can get our personal tools off the site if they're small, but that's it."

Analysis: Simon Jack, BBC business editor

Damned if they did, damned if they didn't?

The government refused to insure Carillion's debts, so the banks pulled the plug. If it had offered guarantees to big banks on behalf of a private company it might have been accused of nationalising losses while privatising profits.

The whole point of having private companies do public work is that they shoulder some of the risk. The truth is the government has been helping out Carillion for a while. Awarding it contracts when it knew it was in trouble raised eyebrows last year.

The government constructed the HS2 contracts so that Carillion's joint venture partners would take on the work if the company went bust - meanwhile it hoped the new contracts would be enough to make Carillion's lenders feel reassured.

Industry sources tell me that if the company hadn't been awarded new government work it would have been curtains for Carillion months ago.

What happens next depends on the actions of a court-appointed official receiver. With the help of a team of experts from accountants PwC, the receiver will review Carillion's business - a process which could take months.

The government has already said it is supporting public services and other firms are likely to take on some of Carillion's other contracts and staff.

Pension impact

Thousands of current and former staff have money in Carillion pension funds, which have a total deficit of almost £600m.

Those funds will now be managed by the Pension Protection Fund (PPF).

The PPF said it was aware news of the liquidation would "raise serious concerns for all people involved".

"We want to reassure members of Carillion's defined benefit pension schemes that their benefits are protected by the PPF."

Shadow business secretary Rebecca Long-Bailey said Labour wanted a full investigation into the government's dealings with Carillion: "This company issued three profit warnings in the last six months, yet despite those profit warnings the government continued to grant contracts to this company."

Carillion might not be a household name, but over the years it has absorbed better-known businesses, including Mowlem and Alfred McAlpine.

It also has a big international business, including projects in Qatar and Canada.

In addition it is a big supplier of construction services to the Canadian government.

Its biggest problems were cost overruns on three UK public sector construction projects:

The £350m Midland Metropolitan Hospital in Sandwell: opening delayed to 2019 due to construction problems

The £335m Royal Liverpool Hospital: completion date repeatedly pushed back amid reports of cracks in the building

The £745m Aberdeen bypass: delayed because of slow progress in completing initial earthworks

'Public service'

Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, said Carillion's collapse "really shakes public confidence in the ability of the private sector to deliver public services and infrastructure".

He said there needed to be a change of "mindset" at companies that do a lot of work for the taxpayer.

"You've got to treat yourself much more as a branch of the public service, not as a private company just there to enrich the shareholders and the directors," he said.

"Ironically, Whitehall tends to do contracts with companies that it always does contracts with, because that's the safe thing to do - that's the perception. A great many small and medium-sized companies feel excluded."

Image copyright HS2/Grimshaw Image caption Carillion is part of a consortium working on the HS2 rail line

Mick Cash, the general secretary of the Rail, Maritime and Transport (RMT) union, said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain.

Rehana Azam, national officer of the GMB union, said: "What's happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons."</s>A question mark hangs over plans to upgrade a main rail route which serves Derby following the collapse of construction giant Carillion.

This morning, it was announced that the firm, which employs 20,000 people in the UK and is involved in landmark infrastructure projects such as HS2, was to go into compulsory liquidation.

It comes after the beleaguered construction and facilities management company failed to secure short-term financial support from stakeholders.

Carillion, which is headquartered in Wolverhampton, is involved in rail projects and maintaining Ministry of Defence properties, as well as managing facilities at schools and prisons.

Its impending liquidation comes after talks between the firm, its lenders and the Government at the weekend failed to end in a deal to save the business.

Last year, Carillion, whose rail business Carillion Rail had an office at the RTC Business Park, in London Road, Derby, was awarded contracts worth £200 million to upgrade the Midland Main Line, the main rail route between Derby and London.

Carillion signed contracts with Network Rail to upgrade track and infrastructure and electrify the route from London to Corby. Although the work would not cover Derby - after the Government pulled the plug on full electrification of the line - Derby rail users travelling to London would still have felt some benefit from the work.

The electric locomotives would be quicker, quieter, more powerful, and more responsive and reliable than diesels engines.

Carillion was awarded the contracts in November - the same month the company issued another profit warning and revealed it was exploring a potential recapitalisation to bolster its balance sheet.

In a statement, Network Rail said: “Network Rail is activating its contingency plans as a result of this unfortunate news.

“Passengers can be reassured that their services will be running as normal today as Carillion's work for Network Rail does not involve the day-to-day running of the railway.

“We will be working closely with the administrators and Carillion’s management team to ensure projects that they are working on continue and that the supply chain is maintained for this important work.

“Our aim is to ensure, as far as possible, that this news has as little impact as possible on our projects to grow and expand the railway network.”

Carillion was also set to deliver elements of HS2. The eastern leg of HS2, between Birmingham and Leeds will run through parts of Derbyshire with the region served by a station at Toton.

The Rail, Maritime and Transport (RMT) has blamed the Government for the collapse of Carillion.

General secretary Mick Cash said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain. We have been warning since Thursday night that we thought the collapse of the company was imminent.

“The blame for this lies squarely with the Government who are obsessed with out-sourcing key works to these high risk, private enterprises.

“RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members' jobs and pensions.

“The infrastructure and support works must be immediately taken in house with the workforce protected.”

At one stage, Carillion was responsible for the upkeep of Derby’s roads.

The firm had been responsible for gritting the streets and repairing potholes at a cost of £4 million a year. But, in 2013, Derby City Council decided to bring the work back in-house - a move which it said would save the authority £300,000 a year. The move resulted in 30 Carillion staff joining the council.

Currently, Carillion is involved in ongoing construction work for the £43 million A50 Growth Corridor through Uttoxeter - due to be completed this November.

The Highways England-funded project will see the creation of a separated junction to the A50 and associated link roads in Uttoxeter

Carillion chairman Philip Green said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future.

“In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

“We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”</s>British construction and services company Carillion collapsed on Monday when its lenders refused to provide any further financial support.

The company, which employs 43,000 people to provide services in defence, education, health and transport, said the government would provide the necessary funding to maintain the public services carried out by its staff.

Carillion is understood to be taking steps to enter into compulsory liquidation with immediate effect. An application was made to the High Court for compulsory liquidation before opening of business on Monday.

The debt-laden company employs 43,000, and works on a variety of projects from hospitals to the HS2 high-speed rail project.

Company executives held talks with the government and other stakeholders on the weekend in a bid to raise new funds.

Carillion’s struggles pose a conundrum for Prime Minister Theresa May over whether to use public money to assist a private company, or allow it to founder, putting public services and infrastructure projects nationwide in danger.</s>London, United Kingdom | AFP | The British government on Tuesday defended its decision not to bail out imploding construction-to-catering group Carillion, as criticism grew of its handling of the giant firm’s demise.

Carillion, which has a variety of private and public service contracts in Britain and employs 43,000 staff worldwide, announced its immediate liquidation Monday after the heavily-indebted company failed to secure a last-ditch financial rescue from the government and banks.

The government’s emergency response committee — known as COBRA — reportedly met for around an hour on Monday evening, with ministers from all affected departments attending, including finance minister Philip Hammond.

Treasury minister Lizz Truss on Tuesday told MPs that “it would be completely wrong for a public company that got itself in this state to be bailed out by the state.”

Thousands of British staff working for private-sector companies inside the stricken conglomerate will only have their wages paid until Wednesday under contingency arrangements.

Prime Minister Theresa May’s government has agreed taxpayers will foot a bill potentially running into hundreds of millions of pounds to continue paying the company’s 19,500 staff in public sector jobs.

“Our number one priority is making sure we supply those public services,” Truss said.

Carillion has public sector and private partnership contracts worth £1.7 billion (€1.9 billion, $2.35 billion), including providing school dinners, cleaning and catering at public hospitals, various construction works and maintaining 50,000 army base homes for the Ministry of Defence.

Hammond said Tuesday that the government had issued a line of credit to Carillion’s receivers “that enables (them) to operate the company’s public sector contracts.”

The company has been struggling for some time and in July last year issued the first of several profit warnings.

Despite the red flags, the government continued to award the company major public contracts, including on a flagship new high-speed rail project, leading to increasingly scathing criticism.

“The collapse of Carillion is a watershed moment,” Labour leader Jeremy Corbyn tweeted Monday evening, alongside a video in which he lambasted private finance initiatives like those the government awarded to the company.

“It is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced taxpayers of billions of pounds,” he added.

Reports suggest up to 30,000 small firms are owed as much as £1 billion (€1.1 billion, $1.4 billion) by Carillion.

Meanwhile the company has been roundly criticised for its executives’ remunerations, with several former directors to be paid hefty salaries and benefits for months.

Britain’s main lobby group representing business bosses called the pay packets “highly inappropriate” and accused them and shareholders of failing to provide “appropriate oversight”.

Roger Barker, head of corporate governance at the Institute of Directors, said “effective governance was lacking at Carillion”.

“We must now consider if the board and shareholders have exercised appropriate oversight prior to the collapse,” he added.

Business Secretary Greg Clark confirmed Tuesday that an investigation had been launched into the conduct of Carillion’s directors to see if they “may have caused detriment to those owed money, including workers and businesses affected”.

Signs at a Carillion construction site in Liverpool, north west England, were defaced with messages including “pay the wages” and “bust”.

Carillion said Monday “it had no choice but to take steps to enter into compulsory liquidation with immediate effect”.

The company, with operations also in Canada and the Middle East, had revenues of £5.2 billion ($7.1 billion, 5.9 billion euros) last year.</s>With thousands of jobs and major infrastructure projects on the line, the chairman of the governing Conservatives said ministers were "keeping a very close eye" on the Carillion negotiations and contingency plans were in place.

Brandon Lewis told the BBC that Carillion was still a going concern. The company said it was continuing to hold talks to avoid entering administration after contract delays and a downturn in new business, which have hit its profit and shares.

"Hopefully, they will be able to work with their partners to get the working capital they need to continue to provide important services," Lewis said.

Carillion is part of a consortium that won a 1.4 billion pound ($1.9 billion) contract to help build Britain’s High Speed 2 railway on last year. The deal had offered it some respite after the company had lost other contracts.

Carillion, which has been in discussions with stakeholders and creditors for nearly a week, said these were continuing as it battles for survival following several profit warnings and a first-half loss of more than 1 billion pounds ($1.37 billion).

But deputy general secretary of the Trades Union Congress, Paul Nowak, called on the government to step in.

"Tens of thousands of jobs are now at risk, along with vital public services and major infrastructure projects across the country," Nowak said in a statement.

Carillion, which is a major provider of public services, employs about 43,000 people worldwide.

"Workers, taxpayers and public service users could well be left to carry the can. Carillion is a textbook example of the failures of privatisation and outsourcing. The government needs to step in, guarantee jobs and services, and explain how they let this mess happen in the first place."

The Conservative Party's Lewis declined to comment on whether ministers were ready to bail out the company, which Sky News had said could enter administration as soon as Monday unless the government backs a rescue plan.

Carillion said on Friday it was having "constructive discussions" with creditors, rejecting suggestions that they did not like the plan put forward by the company.

Shares in the company hit a new low of 14.2 pence on Friday after falling 30 percent.</s>Carillion faces a direct probe into whether fatcat bosses caused the firm's spectacular collapse.

The Tory government has asked independent authorities to "fast-track and expand" their investigation into the construction and public services giant.

The firm plunged into liquidation yesterday, threatening 20,000 jobs and leaving the taxpayer on the hook for a reputed hundreds of millions of pounds.

Carillion faces questions over why its chief executive Richard Howson was being paid £660,000 for a year after he quit - and why Tory ministers granted it more than £1billion in new contracts even after a profit warning last year.

The Institute of Directors has also accused Carillion of "highly inappropriate" behaviour in making it harder to claw back executive bonuses.

Today Business Secretary Greg Clark wrote to the Official Receiver requesting that its probe considers "any individuals who were previously directors".

He added it should consider "whether their actions may have caused detriment to its creditors - including detriment to any employees who may be owed money.

"He [the Receiver] should also consider whether any action by directors has caused detriment to the pension schemes.

"I also ask that the Official Receiver expedites his investigation which will also specifically consider the extent to which the conduct of the directors of Carillion PLC led to its insolvency."

Any alleged misconduct by an individual director would be reported to the Secretary of State.

Mr Clark said: "Any evidence of misconduct will be taken very seriously."

Carillion runs massive railway building projects as well as being responsible for services at schools, prisons and NHS hospitals. It provides school dinners for more than 200 schools.

The firm has 450 government contracts that represent more than a third of its reported revenue in 2016.

The government will continue to provide funding for public services provided by Carillion.

But Downing Street gave no guarantees over Carillion's private sector work, aside from plugging the gap for 48 hours, and could not guarantee no workers will lose their jobs.

Shadow Chancellor John McDonnell today accused the government “drip-feeding more contracts to Carillion to buoy up an obviously failing company”.

He demanded "a full public inquiry immediately to find out exactly what’s happened."

He added: "The Carillion collapse has raised real suspicions that the government was too close to this company and too wedded to its privatisation role."

But Treasury minister Liz Truss said it would have been “completely wrong” for the company to be bailed out by the state.

January 15, 2018: Carillion collapsed after banks refused to provide any further financial support following fruitless rescue talks over the weekend. January 12, 2018: Carillion said it remained in "constructive discussions" with its creditors and that suggestions they had rejected its business plan were incorrect. Sky News reported that Carillion has put administrators on standby in case rescue talks fail. January 9, 2018: Carillion said it was not aware of any development to support a recent share price rise, a day after reports of a government bailout. January 6, 2018: Carillion said it would meet creditors on January 10 as it seeks a financial rescue plan. January 3, 2018: Britain's Financial Conduct Authority said it was investigating statements made by Carillion over seven months up to and including a profit warning last July. December 22, 2017: Carillion said it had received all necessary consents from lenders to defer two financial covenants to April 30 from the end of the year. December 20, 2017: Carillion moved the start date for new chief executive Andrew Davies forward to January 22 from April 2. December 13, 2017: Carillion said it had reached a deal to sell a large part of its UK healthcare facilities management business to outsourcing group Serco, helping it cut debt by £41.4 million. December 11, 2017: Scottish investment firm Kiltearn Partners, the largest shareholder in Carillion, halved its stake, a regulatory filing showed. November 17, 2017: Carillion's shares tumbled 34 per cent after it issued its third profit warning in five months and said it was heading towards a breach of debt covenants and would need fresh capital. November 6, 2017: Carillion won two contracts with state-owned Network Rail, which should generate revenue of almost £200 million for the company over the next three years. October 27, 2017: Carillion named Davies as its chief executive, bringing in a former executive of defence company BAE Systems to help turn around its business. October 24, 2017: Carillion agreed to new credit facilities and deferrals on some debt repayments, sending its shares up as much as 25 per cent. October 12, 2017: Carillion confirmed that it had received proposals from more than one counterparty for the possible acquisition of its UK healthcare business. September 29, 2017: Carillion had its second profit warning in 2017 and said it may need to sell shares to shore up its balance sheet. September 11, 2017: Carillion announced the departure of its finance chief along with a series of changes to its management. August 24, 2017: Carillion said it had been named as the main contractor on a £300 million Manchester property development. July 18, 2017: A Carillion joint venture won contracts worth £158 million to supply catering and other services for British military sites. July 17, 2017: A consortium that includes Carillion won a £1.4bn pound contract to help build Britain's High Speed 2 railway. July 14, 2017: Carillion added HSBC to its team of financial advisers, fuelling speculation that it was preparing a rights issue. July 11, 2017: Carillion shares fell 30 per cent as analysts doubted whether a string of measures to conserve cash would be enough to stave off a rights issue. July 10, 2017: The chief executive of Carillion quit as the group warned on full-year profit and said it was pulling out of three construction markets in the Middle East. The company also said payment problems on four construction contracts nearing or reaching completion had forced it take a provision of £845 million.</s>LONDON/CAMBRIDGE, England (Reuters) - Britain ordered a fast-track inquiry into the role played by Carillion’s directors in the failure of the construction and services group, as some of its thousands of small suppliers started to lay off workers on Tuesday.

The 200-year-old company, swamped by debt and pension liabilities and burning through cash, went into liquidation on Monday, threatening suppliers, merchants and big banks.

The government, which relies on big outsourcing companies such as Carillion to provide services from school dinners to road building, stepped in to guarantee that key contracts would be unaffected.

But it said other work would only be paid for 48 hours after the collapse, and thousands of small suppliers face unpaid bills totaling millions of pounds.

Business Secretary Greg Clark said a full picture of the events which caused Carillion to enter liquidation needed to be established by the Insolvency Service.

“I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors,” he said.

“Any evidence of misconduct will be taken very seriously.”

Carillion’s auditors, KPMG, would also be examined, he added.

Carillion was responsible for providing millions of pounds of public services as well as major infrastructure projects in Britain, Canada and the Middle East. It was winning state contracts as recently as November.

Rudi Klein, head of Britain’s Specialist Engineering Contractors’ Group, estimated that Carillion had left a trail of 1.2 billion pounds in unpaid bills to thousands of small subcontractors.

Examples of private companies that could be hit included a small Northern Irish engineering contractor owed 150,000 pounds and a concrete frame manufacturer in northwest England owed 2 million pounds, Klein said.

Flora-tec, a corporate horticulture company based in Cambridgeshire, eastern England, said it is owed almost 1 million pounds for its work on Carillion contracts at local prisons, schools and hospitals, and had to lay off 10 of its 90 staff.

“People were in tears, colleagues we worked with for a long time. But as soon as we knew what happened we had to cut our cost base,” Managing Director Andy Bradley said.

He told Reuters he felt he had been misled.

“Government, even despite several profit warnings, continued to give Carillion large public sector contracts (...) and the message that sends to businesses like mine, the small guys in the supply chain, is that central government must have confidence in Carillion,” he said.

“I want the government to think long and hard about the SME sector, because we are the people that will bear the brunt of this, not the shareholders and not the big multinational conglomerates.”

Britain began outsourcing public services in the late 1980s under Margaret Thatcher and the model expanded under successive governments. It is now the world’s second-largest outsourcing market behind the United States.

Spun out of Tarmac nearly 20 years ago and incorporating construction names such as Wimpey and Alfred McAlpine, Carillion operated in Britain and Ireland, Canada, the Middle East and North Africa.

It was working on 450 British government projects, including the building and maintenance of hospitals, schools, defense sites and a high-speed rail line.

The government has faced questions as to why it continued to award Carillion contracts after it first signaled it was in financial difficulty in July last year.

Just a week after that first warning, Carillion was named as one of the contractors on Britain’s new High Speed 2 rail line, a flagship project that will better connect London with the north of England. In November, it won a further two contracts with state-owned Network Rail.

Mike Cherry, chairman of the Federation of Small Businesses, said it was vital that Carillion’s small business suppliers were paid, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk.

“When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses,” he said.

Carillion former chief executive Richard Howson, who stepped down after the group warned on profit in July, was paid more than 1.51 million pounds ($2.08 million) in salary and bonuses in 2016, according to the company’s annual report.

He will continue to be paid a 660,000-pound salary until Oct. 2018 under the terms of his notice when he left the group in November, after handing over to interim CEO Keith Cochrane, according to a statement on the company’s website.</s>The Government is coming under pressure not to “duck and dive” over the pay and jobs of workers caught up in the collapse of construction giant Carillion amid mounting fears of redundancies.

Theresa May’s Cabinet was meeting on Tuesday as the fallout from the crisis continued to reverberate through the Government.

Top executives face investigation after the firm’s demise put thousands of jobs at risk and saw the Government heavily criticised for its role in the debacle.

Labour leader Jeremy Corbyn said Carillion’s collapse was a “watershed moment” that should bring an end to “rip-off privatisation” of public services.

The leader of the Rail, Maritime and Transport union is pressing Transport Secretary Chris Grayling and other ministers to clarify who qualifies as a public sector worker after an announcement that firms working for Carillion on purely private sector deals will only have two days of Government support.

RMT general secretary Mick Cash said: “We have been told this morning that only Carillion workers on what the Government defines as ‘public sector’ contracts will be guaranteed their wages.

“Clearly, anyone working in the rail sector is providing a service to the public and we are calling on the Government to confirm this morning that there will be no dispute over this point and that our members will continue to be paid with their functions taken directly in house.

“There should be no equivocation from the Government and no attempt to duck and dive around this issue. The Government have known for months that Carillion was in trouble and they should have had plans well in hand for just this situation.

“All of the Carillion rail works on the various contracts can be brought ‎in house easily and that is what we expect to happen with jobs and services protected. If there’s limitless amounts of cash to bail out rail franchises like Southern and East Coast there should be no penny pinching when it comes to workers caught in the crossfire of the Carillion collapse.”

Engineering services bodies ECA and the BESA told Business Secretary Greg Clark in a meeting on Monday evening that the loss of hundreds of millions of pounds owed by Carillion is likely to damage many specialist suppliers, and put others out of business.

The BESA and ECA urged the Government to ensure that firms affected by the collapse of Carillion receive maximum Government and banking support.

Business Secretary Greg Clark has written to the Insolvency Service and the Official Receiver asking that the statutory investigation into the conduct of Carillion’s directors is fast-tracked and extended in scope.

This means the Official Receiver’s investigation will consider whether those who are, or were previously directors of the company may have caused detriment to those owed money, including workers and businesses affected.

The Business Secretary has also written to the chairman of the Financial Reporting Council Sir Win Bischoff and asked it to conduct an investigation into the preparation of Carillion’s accounts past and present, as well as the company’s auditors.

Mr Clark said: “It is important we quickly get the full picture of the events which caused Carillion to enter liquidation, which is why I have asked the Insolvency Service to fast-track and broaden the scope of the Official Receiver’s investigation.

“In particular, I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors. Any evidence of misconduct will be taken very seriously.”

TUC general secretary Frances O’Grady called for a national task force involving unions to safeguard jobs, services, and pensions.

“Workers can’t be left at the back of the queue. Each and every worker at Carillion needs to know where they stand. They have bills and mortgages to pay, and deserve certainty on their future.

“We have to ensure that there aren’t more Carillions on the horizon. That means an immediate risk assessment of all large outsourcing firms with government contracts. Public services are already under pressure, and can’t take another hit like this.”

The Government has been heavily criticised for its role in the collapse of Carillion.

But after attending a meeting of the Government’s emergency planning committee Cobra on Monday night, Cabinet Office minister David Lidington said efforts to deal with the crisis had “gone pretty well”.

He said: “The message today was that day one had gone pretty well, people were turning up to work, we had not had reports of any serious disruption to service delivery.

“But we also had a report from PwC, who are working as the special managers for the Official Receiver, that took us through the advice they are providing to concerned employees and contractors on their website and through their helpline.

“And it was an opportunity for ministers just to test what is going on, what sort of concerns are being expressed and to decide how we should best address those and provide the reassurance people want.”

A last-ditch plea from Carillion to the Government to provide it with a £20 million lifeline fell on deaf ears over the weekend, triggering a compulsory liquidation to be overseen by PwC.

Carillion has public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence.

But it has seen its shares price plunge more than 70% in the past six months after issuing a string of profit warnings and breaching its financial rules.

The group, which employs around 20,000 British workers, has been struggling under £900 million of debt and a £587 million pension deficit.

Mr Lidington told Parliament on Monday afternoon that the Official Receiver would investigate the role of the company’s former and current directors, warning they could face “severe penalties”.

He spoke amid growing anger at bumper payouts received by former chief executive Richard Howson.

He pocketed £1.5 million in salary, bonuses and pension payments during 2016 and, as part of his departure deal, Carillion agreed to keep paying him a £660,000 salary and £28,000 in benefits until October.

Liberal Democrat leader Sir Vince Cable said this was a “reward for failure that has to be looked into”.

Theresa May’s official spokesman said that, initially, the Government will be paying staff through the Official Receiver to ensure that public services continue to run as normal.

He added that there would be some additional burden on the taxpayer from the cost of the receiver.

But Mr Lidington insisted that Carillion’s failure will see “shareholders and lenders bear the brunt” of the pain, rather than taxpayers.

Shareholders will be wiped out and lenders including HSBC, Barclays, Santander and Royal Bank of Scotland are reportedly set to lose an estimated £2 billion as a result of the collapse.

The group’s demise has posed questions as to why Carillion continued to receive Government contracts despite issuing a number of profit warnings.

Asked whether it had been a mistake to continue awarding contracts to Carillion, the PM’s spokesman said: “Since July, we have kept a very close eye on this, but of course if there are lessons which can be learned, they will be.”

Steve Webb, the former pensions minister, also questioned why the company had increased its dividend payments when it was grappling with a hefty pension deficit.

In a tweet, he wrote: “2016 Carillion annual report says dividend ‘has increased in each of 16 years since formation of company’; Is this really acceptable alongside a pension fund deficit over half a billion pounds?”

Carillion retirees already receiving their pensions will continue to receive payments, the Government has said.

However, there are around 27,000 staff involved in its defined benefit schemes which are likely to be transferred to the Pension Protection Fund (PPF).</s>Construction giant Carillion has said it has “no choice but to take steps to enter into compulsory liquidation with immediate effect” after talks failed to find another way to deal with the company’s debts.

The stricken firm, which employs 20,000 workers across Britain, said crunch talks over the weekend aimed at driving down debt and shoring up its balance sheet had failed to result in the “short-term financial support” it needed to continue trading while a deal was reached.

Carillion, which has been struggling under £900 million of debt and a £590 million pension deficit, has seen its shares price plunge more than 70% in the past six months after making a string of profit warnings and breaching its financial covenants.

Its collapse poses questions as to why the group continued to receive Government contracts despite issuing a number of profit warnings.

The Government has urged staff to keep going to work and said “those already receiving their pensions will continue to receive payment”.

Britain’s second biggest construction firm is understood to have public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 Army base homes for the Ministry of Defence.

Carillion chairman Philip Green said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

“In recent days, however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

“We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”

Carillion had met lenders HSBC, Barclays, Santander and Royal Bank of Scotland on Wednesday to discuss options for reducing debts, recapitalise or restructure the group’s balance sheet.

Sources had told the Press Association that a business plan tabled by the group during the meeting was knocked back because it failed to present a solid proposition for restructuring the business.

However, the company denied the plan had been rejected, adding that any restructuring of the business could result in a debt-for-equity swap.

The Government, pension authorities and stakeholders also met on Friday in an attempt to thrash out a rescue package, with talks spilling over into the weekend.

The Official Receiver has now been appointed alongside partners at accountancy giant PwC to oversee the liquidation of the company

Cabinet Office Minister David Lidington said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.

“Since profit warnings were first issued in July, the Government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business.

“We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality.

“It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.

“We understand that some members of the public will be concerned by recent news reports. For clarity – all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.”

Unions have called for urgent reassurances over the jobs, pay and pensions of thousands of workers following the “disastrous” news.

Officials from several unions representing workers on the railways, construction sites, prisons, hospitals and schools are seeking information from the company and ministers.

Rail, Maritime and Transport union general secretary Mick Cash said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain.

“We have been warning since Thursday night that we thought the collapse of the company was imminent.

“The blame for this lies squarely with the Government who are obsessed with outsourcing key works to these high-risk private enterprises.”

Jim Kennedy, the Unite union’s national officer for local government, said a public inquiry was needed to answer questions about Carillion’s conduct and the Government’s decision to award it contracts.

Nicola Parish, executive director at The Pensions Regulator, said: “It is too early to comment on possible outcomes for the various pension schemes connected to Carillion.

“In the meantime, I would like to assure scheme members that the government set up the Pension Protection Fund (PPF) to support members of workplace pensions in precisely these circumstances.”

Shares in Carillion have been suspended on the London market following the liquidation announcement.</s>Construction giant Carillion has said it has “no choice but to take steps to enter into compulsory liquidation with immediate effect” after talks failed to find another way to deal with the company’s debts.

Construction giant Carillion has said it has “no choice but to take steps to enter into compulsory liquidation with immediate effect” after talks failed to find another way to deal with the company’s debts.

The stricken firm, which employs 20,000 workers across Britain, said crunch talks over the weekend aimed at driving down debt and shoring up its balance sheet had failed to result in the “short-term financial support” it needed to continue trading while a deal was reached.

Carillion, which has been struggling under £900 million of debt and a £590 million pension deficit, has seen its shares price plunge more than 70% in the past six months after making a string of profit warnings and breaching its financial covenants. Its collapse poses questions as to why the group continued to receive Government contracts despite issuing a number of profit warnings.

The Government has urged staff to keep going to work and said “those already receiving their pensions will continue to receive payment”. Britain’s second biggest construction firm is understood to have public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 Army base homes for the Ministry of Defence.

Carillion chairman Philip Green said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years. “Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

“In recent days, however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision. “We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”

However, the company denied the plan had been rejected, adding that any restructuring of the business could result in a debt-for-equity swap. The Government, pension authorities and stakeholders also met on Friday in an attempt to thrash out a rescue package, with talks spilling over into the weekend.

HMG has big questions to answer. Why were they awarding contracts to Carillion after the exposure of its problems in July? What contingency planning did they do for the collapse? 20,000 jobs & huge projects at stake! More Brexit-induced Whitehall paralysis & incompetence. https://t.co/dYZ4XUUWgn — Andrew Adonis (@Andrew_Adonis) January 15, 2018 The Official Receiver has now been appointed alongside partners at accountancy giant PwC to oversee the liquidation of the company Cabinet Office Minister David Lidington said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.

“Since profit warnings were first issued in July, the Government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business. “We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality. Breaking news saying Carillion have gone into liquidation. It is VITAL for govt to ensure the firm's public service contracts, employees and public money are protected first. The govt need to outline the contingency plan they promised in the House, when I question them on weds. — Jon Trickett (@jon_trickett) January 15, 2018 “It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.

“We understand that some members of the public will be concerned by recent news reports. For clarity – all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.” Unions have called for urgent reassurances over the jobs, pay and pensions of thousands of workers following the “disastrous” news. Officials from several unions representing workers on the railways, construction sites, prisons, hospitals and schools are seeking information from the company and ministers.

#Carillion: Tens of thousands of jobs at risk, along with public services and major infrastructure projects. Govt must step in.



TUC statement: https://t.co/y84m4fD1GR — TUC Press Office (@TUCnews) January 14, 2018 Rail, Maritime and Transport union general secretary Mick Cash said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain. “We have been warning since Thursday night that we thought the collapse of the company was imminent. “The blame for this lies squarely with the Government who are obsessed with outsourcing key works to these high-risk private enterprises.”

Jim Kennedy, the Unite union’s national officer for local government, said a public inquiry was needed to answer questions about Carillion’s conduct and the Government’s decision to award it contracts. Nicola Parish, executive director at The Pensions Regulator, said: “It is too early to comment on possible outcomes for the various pension schemes connected to Carillion. “In the meantime, I would like to assure scheme members that the government set up the Pension Protection Fund (PPF) to support members of workplace pensions in precisely these circumstances.”
After talks between the company, its lenders, and the United Kingdom's government fail to reach a deal, British multinational facilities management and construction services company Carillion fails and is liquidated, threatening thousands of jobs. Carillion is currently involved in projects such as the high-speed rail in the United Kingdom, including the High Speed 2 rail line.