Carillion crisis talks as £600m pension black hole triggers government summit with regulators

 
Oliver Gill
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London's Crossrail Project Reaches Canary Wharf
Carillion was yesterday praised by the government for Christmas progress on London's Crossrail project (Source: Getty)

Top government ministers held a crisis meeting yesterday to discuss struggling contractor Carillion, which is feared to be close to collapse.

The summit preceded a meeting scheduled for today between Whitehall officials, Britain's pension watchdog and pensions lifeboat to discuss the contractor's near-£600m retirement fund black hole.

Convened by the Cabinet Office minister David Lidington, yesterday's meeting rounded up representatives of numerous Whitehall departments. Business secretary Greg Clark, transport minister Jo Johnson, chief secretary to the Treasury Liz Truss and justice minister Rory Stewart were all present, according to reports.

Ministers representing culture, health, the Foreign Office and education were also present.

Carillion holds a number of contracts with the government, a large proportion of which are with the Cabinet Office.

The government admitted earlier this week that contingency plans are in place for the failure of Carillion.

Today, senior Cabinet Office officials, the Pensions Regulator (TPR) and the Pension Protection Fund (PPF) will be joined by Carillion's pension trustees and advisers. Sky News first reported plans for the meeting. Yesterday's crunch talks were first reported by the Financial Times.

A spokesperson for TPR admitted the regulator is "closely involved" in discussions with Carillion and its trustees, adding it was would not comment further "unless it becomes appropriate to do so".

Shares in Carillion plunged over 15 per cent today as investors were treated with radio silence after the company presented a turnaround plan to its lenders on Wednesday.

Read more: Carillion’s banks were left on the sidelines while shares plummeted

Hopes had been raised at the start of the week after the contractor confirmed over the weekend it would meet with its banking syndicate led by Royal Bank of Scotland, Barclays and HSBC. But most of the gains were reversed on Tuesday after the company issued an announcement pouring cold water on the hopes.

Carillion has a pension deficit is £587m, according to its annual accounts.

A spokesperson for the PPF said:

The PPF is aware of the discussions between the company, government and banks and, along with the trustees and the Pensions Regulator, will act as it always does to protect the interests of Carillion scheme members and levy payers.

Read more: Revealed: Behind the scenes of Carillion's annus horribilis

In-house?

Meanwhile, Britain's biggest trade union this afternoon urged the government to "consider all possible options", including stripping Carillion of its contracts and bringing them under direct state control.

“If taxpayer’s money is used to fund corporate mismanagement then the government should be looking to ensure that public sector contracts are brought back in-house at the earliest possible opportunity," said Unite assistant general secretary Gail Cartmail.

“If the government is forced to institute a rescue package they need to also ensure that the supply chain is fully protected as many of these workers lack even the protection of basic employment rights, as they are employed on a bogus self-employed basis, through agencies and via umbrella companies.”

Meanwhile Mick Cash, general secretary of the RMT Union released a statement this evening comparing the possible collapse of Carillion to that of Metronet and Jarvis.

"This is the high risk gamble you take with handing infra structure over to speculative private companies," he said, "and the workers caught in the cross fire must be protected and Ministers must take immmediate responsibility for giving those assurances without any prevarication."

The Cabinet Office has been approached for comment on both issues.

Read more: One of Carillion's biggest backers just revealed it sold a chunk of shares

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