How much will it cost the taxpayer to clean up Carillion mess?

By Pete Madeley | Wolverhampton | Politics | Published:

Pat McFadden has launched a bid to get to the bottom of the Carillion crisis, asking the Government: How much will it cost the taxpayer to clean up this mess?

Wolverhampton South East MP Pat McFadden

The Wolverhampton South East MP has written to Business Secretary Greg Clark with a series of questions over the Government's involvement in the collapse of the city-based construction giant.

He has demanded details of the Government's financial decision making in relation to the firm, which only held £29 million in its accounts when it went bust on Monday.

The extent to which ministers attempted to assist the firm in the run up to its liquidation must also be revealed, Mr McFadden said.

It comes as the Labour MP, who served as a Business Minister under Gordon Brown, warned that the company's winding up would leave taxpayers facing 'substantial costs'.

These would include paying for the management of the firm's contracts, and dealing with its thousands of sub-contractors, he said.

Mr McFadden told the Express & Star: “I have written to the Business Secretary today to get a clearer picture of why Carillion’s attempts at a rescue package failed and why the company eventually went into liquidation.

"In particular, I think it’s important to know what financial help the company asked for from the Government and how the costs of this to the taxpayer might compare to the costs of winding up the company, unravelling its many public sector contracts and dealing with the implications for the thousands of sub-contractors who worked with Carillion.


"Did ministers have a clear financial picture of these options before them and what were the different sums involved?

"Unwinding Carillion will be an expensive and very complex process and I want to know what this will cost the taxpayer.

"I hope I get clear answers to these questions which I think are very much in the public interest.”

Carillion owed £1.3bn to banks when it collapsed, putting thousands of jobs at risk, including around 400 in Wolverhampton.


Mr Clark has ordered a fast-track probe into directors at the firm after it emerged they had awarded themselves bumper bonuses as the companies slid into insolvency.

The Insolvency Service announced that bonus payments to Carillion directors – including severance payments to former executives – have been stopped after the date of liquidation.

Here is the full list of Mr McFadden's questions:

  1. Press reports indicate that the court statement lodged by Carillion CEO Keith Cochrane says that the company made at least one if approach if not more to the Government seeking financial help. (a) How many approaches did the company make in recent months? (b) When did they take place and what sums of money were discussed?
  2. How much was Carillion seeking from its lenders in the discussions which took place before liquidation?
  3. Was there any discussion between the Government and Carillion’s banks about what would be needed from Government to avoid liquidation? If so, what was the sum of money being requested from Government?
  4. Was there an estimate made of the cost to the public purse of unwinding the business, the impact of liquidation on Carillion’s thousands of sub-contractors, sorting out and re-tendering or selling the existing contracts and all the other associated costs which will now have to be paid? Again, if there was an estimate of these costs given to Ministers before the company went into liquidation, what was the figure involved?
  5. Did the Government make a comparison between the cost to the public purse of any financial help the company may have been seeking and the cost to the public purse which would arise from liquidation?
  6. Why was liquidation chosen as the path for wind up rather than administration? Did the Government make a cost comparison of these two options? If so, what were the estimates of the costs involved that the Government had before them?
  7. When will the official receiver report on their investigation into corporate governance, including changes to the company’s renumeration scheme in 2016?
  8. Did Ministers or officials meet with the company’s management and trade unions in the run up to liquidation? If so when and what was discussed?
  9. Did the Government appoint financial advisors to help it make decisions about this matter? If so, who were they?
  10. What process does the Government have in place for dealing with Carillion’s thousands of sub-contractors, given the potential of a domino effect from the company’s collapse?
Pete Madeley

By Pete Madeley

Political Editor for the Express & Star. Responsible for local and national political stories, opinion, comment and analysis.


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