Future 'more certain' for Wolverhampton Carillion workers, top MP claims
The future for Carillion workers based in Wolverhampton ‘looks more certain’ than it did a week ago, the Business Minister has said.
Andrew Griffiths described the city as the firm’s ‘nerve centre’ and highlighted its importance in ensuring ‘a smooth transition’ over the coming weeks.
He was speaking during an opposition day debate on Carillion, which went bust last week with debts approaching £1.5 billion.
More on the Carillion crisis
Responding to questions from city MPs Pat McFadden and Emma Reynolds, Mr Griffiths said: “The decision by the directors to put Carillion into insolvency, affects the lives and the livelihoods of not just the 19,500 Carillion employees, but also many thousands of small businesses, contractors, and employees up and down the country.”
He added: “The special manager has made commitment that staff will get paid until at least the end of the month, but as was highlighted in the debate, Wolverhampton is the nerve centre and if the special managers are to continue running the business going forward, in order to maximise the benefits to creditors, and also to ensure a smooth transition, that nerve centre is absolutely vital to that future.
“So I think they should take some confidence that the future for them looks more certain.”
Wolverhampton South East MP Mr McFadden addressed a number of issues, including what assurances would be in place for Wolverhampton staff, and the likely liquidation costs to the taxpayer.
The former shadow business secretary said: “I understand the implications of an insolvency, but an assurance that they will be employed until the end of the month is not good enough when there is only one week of the month left.
“The staff need more than that.”
Costs to the taxpayer
He added: “Court documents filed by the chief executive last week show that Carillion was engaged in a desperate effort to keep open lines of credit with its banks.
“From the outside, it is of course difficult to judge whether those efforts may have borne fruit or whether they were always a lost cause. In any case, the liquidation has decided the outcome. However, those discussions involved not just Carillion and the banks; the Government were involved, too.
“What exactly did Carillion ask the Government for in the days running up to liquidation? In what form was that help asked? Was it a loan, or was it the underwriting of activities in case cash-flow projections did not materialise?
“How did the Government take the decision to refuse these requests?
“Which Ministers were involved, and what was the process for ultimately saying no? Crucially, when the decision to refuse was taken, was any comparison made between the likely cost to the public purse of keeping the company going and the cost of turning down the request for financial help and seeing the company collapse? Much has been said about the wrongness of using public money to bail out companies.
“Company failure is, of course, an inescapable feature of any market economy, but in this case the taxpayer was not free to walk away, as we have seen and as has been confirmed.
“The taxpayer is paying the costs of liquidation. We want answers to those questions.”
Wolverhampton North East MP Ms Reynolds told the Commons: “The Government still have serious questions to answer about their handling of this matter.”
She asked why the Government’s Crown representative was not overseeing the firm’s 450 public sector contracts during the ‘crucial period’ from August to November 2017.
“The directors of the company have serious questions to answer, too,” she added.
Stronger penalties
“It was clearly wrong that the senior management were being paid big salaries and bonuses while racking up debts of more than £2 billion.
“Only a year ago, the then chief executive, Richard Howson, received a pay package of £1.5 million a year. I was taken aback by the media reports that the remuneration arrangements were amended to prevent the clawback of salaries and bonuses. When I raised this matter with the Chancellor of the Duchy of Lancaster last week, he assured me that the official receiver had the power to impose penalties on the company’s directors. I hope that such penalties will be imposed.”
Ms Reynolds said it seemed likely that Carillion’s senior management will be ‘let off the hook’, as so many directors of failed banks were following the financial crisis.
“Surely this has to change,” she said.
“We need stronger penalties for directors who breach their duties.
“I hope that lessons can be learned about public procurement, and that urgent reforms will be made to corporate governance to prevent those at the top of failing companies from lining their pockets and simply walking away when the companies collapse.” Warley MP John Spellar also featured in the debate, questioning Cabinet Office Minister David Lidington on the impact of Carillion’s collapse on the Midland Metropolitan Hospital.
