Carillion collapse: Corbyn accuses Government of ‘negligence’

Labour leader Jeremy Corbyn today accused the Government of “negligence” over the collapse of Carillion, the embattled construction company awarded £2bn in Government contracts even after it issued profit warnings.

“Between July and the end of last year, the share price of Carillion fell by 90%, three profit warnings were issued. Unbelievably, some contracts were awarded by the Government even after the third profit warning,” Corbyn said during Prime Ministers Questions, reports Business Insider. He added that the Government had either been trying to keep the company afloat “or it was just deeply negligent of the crisis that was coming down the line”.

Carillion dominated today’s PMQs, with Theresa May stressing that her government was a Carillion customer, not their manager, and that taxpayers were protected from bailing out the private company, which employed 20,000 workers in the UK and was the nation’s second-largest construction company.

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Carillion was forced into liquidation on Monday, raising questions about how the Government handles public-private partnership (PPP) contracts - generally long-term public and private sectors agreements to build hospitals and roads, or offer services to schools, prisons and other facilities traditionally run by the state.

“The construction giant’s collapse is a disaster not just for employees and taxpayers, but for public-private partnership policy,” says The Guardian, adding that the “list of failures and disappointments is lengthening”.

G4S, Serco, Mitie and Interserve have also run into trouble fulfilling government contracts.

According to the The Guardian, part of the problem with major PPP construction deals is that the contract winner is handed a large amount of cash upfront. This allows construction to begin, but since sub-contractors rarely need to be paid immediately, much of that money may be used to pay other debts, creating a situation where “firms must keep winning new contracts just to keep going”.

The Independent says the collapse of Carillion should teach the UK a lesson about the way the country has tried to avoid paying for our public services.