Carillion Crisis
 

Carillion, a major contractor in the public sector, is close to collapse.

https://news.sky.com/story/regulator...epens-11203432

https://www.ft.com/content/1b4ab6aa-...5-e94187b3017e

This could be quite bad...

Re: Carillion Crisis
 

Carillion are like a bank. Too big to fail! Will be interesting to see how this is resolved, it's been going on for some time now but because it's not public-facing it doesn't get the attention that retailers and car companies get.

Re: Carillion Crisis
 

I wonder how much this is going to cost the taxpayers?

Re: Carillion Crisis
 

If they have so much govt work then why are they in trouble, surely they must be doing something wrong ?

Re: Carillion Crisis
 

Exactly.

Re: Carillion Crisis
 

Happens all the time with tenders. The companies bid at an unsustainable number, the government accepts the lowest bid, the companies attempts to make that number work fall flat on their face.

Re: Carillion Crisis
 

1) Pension deficit from final-salary scheme
2) Over-borrowing.

Re: Carillion Crisis
 

Apparently the government were still awarding them contracts when ministers knew they were in deep trouble.

https://www.theguardian.com/business...k-to-carillion

Re: Carillion Crisis
 

Carillion goes into liquidation.

https://www.theguardian.com/business...-business-live

Not good at all sadly as big questions will need to be answered in these coming days by the government.

Re: Carillion Crisis
 

Government(s)..Successive ones..

Re: Carillion Crisis
 

Governments only set the general direction. It's Whitehall civil servants not party's that actually do the contracts and they adhere to the "Nobody ever got sacked by buying IBM" philosophy. Thus Carillion having been on the "approved" list would continue to be given the contracts irrespective of the city feedback on it's parlous financial state.

It's the same philosophy that allows the "approved" suppliers to charge an arm and a leg for basic supplies and services. Even if the civil servants had the will to go out and find bargain supplies they would be prevented from taking them up. This culture wastes £Billions. :(

Re: Carillion Crisis
 

Indeed Maggy but don't expect any proper answers as we know what governments are like for obfuscating the real truth..

Re: Carillion Crisis
 

However the buck stops with the Government of the day..

Re: Carillion Crisis
 

IIRC the company is owed some £500m by 2 middle east states and that's more than half their debts.

Also I can just hear the outcry from Labour and the unions had HMG not awarded those contracts some months ago and thereby and put job at risk then. Rock and a hard place...

Re: Carillion Crisis
 

Apparently the buck always tops with Labour, whatever the subject, for one poster Maggie ! ;)

I don't only blame this govt, but the privatised rail companies (inc. the bankrupt Railtrack), the privatised Energy Utilities and now Carillion, have all served the the public badly.

Public services in the private sector occasionally make sense, but they are after one thing only, profit for their shareholders. Providing a public service will be low down the list. When they miscalculate and get too greedy for contracts, they go bust hoping we'll bail them out.

Looks like the Govt. are going to have to re-nationalise some areas to keep services going. It will stick in their throats and cost us dear no doubt.

Re: Carillion Crisis
 

Labour is just as guilty as the Tories..I'm making no distinction.

Re: Carillion Crisis
 

That is very true as Blair and Brown are just as guilty as this current government but alas some only want to see things through their own illogical reasoning.

Re: Carillion Crisis
 

And that is exactly right, Maggy. Labour awarded many contracts to Carillion during their period of office, too.

The problem is indeed with the tendering process. There should be less concentration on the lowest bids and more concentration on the overall package - how the tender meets requirements, quality, etc, but also the financial sustainability of the bid and the financial viability of the company.

Re: Carillion Crisis
 

It's happened with rail franchises too. The cheapest provider wins even if it's obvious they will struggle to make it work. The other thing is these companies just sub-contract out the work to smaller suppliers and then don't pay them for months...

Re: Carillion Crisis
 

http://www.bbc.co.uk/news/business-42695661

It just gets worse and worse..Maybe business regulations need tightening up far more than they are at present though I suspect no one will have the will to do it. Prompt payment should be a necessary part of the schedule.

Re: Carillion Crisis
 

Looks like the City was sceptical about Carillions position for some time:

Source

The auditors and the auditing process has to be questioned.

Re: Carillion Crisis
 

I find myself agreeing with you, Maggy. I hope the government will take this collapse as a prompt to change things that need to be changed. For example, those who do not pay up on time should be held to account, so that the company to be paid can apply immediately for enforcement of the payment, with a fine for each day the bill remained unpaid. The company not paying should face a drastic penalty if it had not done so within three months of the order, such as a compulsory winding up. Pensions should not be capable of being plundered by companies - they should be required to pay all pension payments into a government agency for safe keeping and eventual payouts. And so on.

Many of our problems could be resolved by quite simple measures which would bolster discipline and stop the abuse of the law by companies.

Re: Carillion Crisis
 

The trouble is governments of the last 20 years have become too Laissez-faire IMO as governments when it is right need to intervene more instead of leaving it to unfettered capitalist economics.

Re: Carillion Crisis
 

Carillion, just another company that got too big for it's boots.

Would be a shame if the Directors had to pay back their bonuses and pension pots . . . as if :rolleyes:

Re: Carillion Crisis
 

There are times when it is right to intervene, such as when companies are not playing by the rules. However, the rules need to be straight forward to understand and apply, should not unduly restrict new ideas and new ways of doing things and the rules need to let companies manage as they see fit but within accepted parameters.

When companies deliberately flout these rules, the penalties should be harsh enough to deter such behaviour in the future. There should be tax breaks for those employers that invest in growing their companies, pay their employees a fair proportion of the CEO's salary and provide better pension schemes. Tax evasion penalties should be so harsh that companies would move heaven and earth to comply, but all this would be in the context of a low tax economy. Tax avoidance should not be frowned on as this should only be possible through companies taking advantage of schemes approved by the government.

Laissez faire is all well and good, but given human nature, it needs to be applied with conditions and expectations.

Re: Carillion Crisis
 

http://www.bbc.co.uk/news/business-42703549

Not holding my breath.

Re: Carillion Crisis
 

We do need an investigation, but the first priority should be to work out how to keep this business going and to ensure that all the employees and creditors are paid without delay.

Re: Carillion Crisis
 

The business itself needs to fail. It needs to be shown that if you run your company into the ground it won't be rescued no matter who your customers are.

Saying that, I agree completely that employees and small sub contractors need as much help as is possible.

Re: Carillion Crisis
 

Sorry, my post wasn’t clear. I agree that Carillion should be allowed to fail. I was referring to the resultant business dealing with public sector contracts. The liquidator will have to sort out the private sector part of the business.

Re: Carillion Crisis
 

Every director should have their assets seized, and the "golden hand shakes" made void.

their house sold and evict them.

why should they get away will bankrupting a compy and keep their house while others will lose theirs.

Re: Carillion Crisis
 

Maybe the Government should look into managing more of this projects themselves in the way TFL do. TFL subcontract out the actual physical work but they have much greater control of the projects themselves. The Government obviously shouldn't be directly involved with many of these tasks, hiring builders etc, but they shouldn't be so abstracted from them either.

This is another example of everything being handed off, there being probably decent evidence everyone knew for a while it was failing, but the government get to claim it's nothing to do with them. In the end the companies doing the manual work don't get paid, the staff lose their jobs and the public pick up the bill.

Re: Carillion Crisis
 

Re: Carillion Crisis
 

Carillion tried to 'wriggle out' of pension contributions.

http://www.bbc.co.uk/news/business-42853895

Re: Carillion Crisis
 

Aparently according to R4 business segment this morning they were paying dividends out to shareholders on the basis of anticipated revenues rather than actual profits. All sound very dodgy and the auditors KPMG are to be investigated.

Re: Carillion Crisis
 

Shares in UK government contractor Capita plunge 40% after profit warning.

https://www.theguardian.com/business...profit-warning

Re: Carillion Crisis
 

They're the outfit behind the knuckle draggers at TVL so I, for one, have very mixed feelings. :erm:

Re: Carillion Crisis
 

About time KPMG are investigated. They have a hell of a spotty record. How they haven't been done for fraudulent practices beats me.

Re: Carillion Crisis
 

Carillion CFO says the supply chain let contractor down.

https://www.constructionnews.co.uk/c...027847.article

Too many fingers in too many pies and the consequences of it all are there for all to see.

Re: Carillion Crisis
 

Why haven't the bosses had their assest frozen?

TBH they should all lose everything and given a 1 bedroom home which they need to rent.

Re: Carillion Crisis
 

Frank Field summed it up succinctly when a string of senior directors from the Wolverhampton-based collapsed construction and infrastructure group Carillion appeared before two select committees at the Houses of Parliament today.

https://www.birminghampost.co.uk/bus...ntary-14254821

Re: Carillion Crisis
 

Whipped round the City mile wearing sackcloth and ashes. :scratch:

No, they'll just present their day-glow credentials to the next organisation that they'll run into the deck.

Re: Carillion Crisis
 

Classic case of really bad management from the very top. The directors should be held to account for this failler of the first degree.

Re: Carillion Crisis
 

Same reason certain inept/negligent/or worse public sector grandees seem to move from one highly paid post to another leaving a trail of failure behind them in their wake.

Re: Carillion Crisis
 

And gets a juicy golden handshake and gold plated pension when they slink off to their retirement homes way before everybody else retires.

Re: Carillion Crisis
 

Carillion was in trouble by mid-2016, says whistleblower.

https://www.theguardian.com/business...-whistleblower

Re: Carillion Crisis
 

It will all get repeated when Capita goes..

Re: Carillion Crisis
 

Exactly as they can dress it up in bright and shiny new clothes but the deep fault lines still remain the same.

Re: Carillion Crisis
 

An unpublished report, commissioned by the board of the collapsed construction firm Carillion four months before its liquidation, has been released by MPs.

www.bbc.co.uk/news/business-43275605

https://www.telegraph.co.uk/business...ings-finances/

Re: Carillion Crisis
 

'Recklessness, hubris and greed' not my words but the words of the select committees.

https://www.theguardian.com/business...slammed-by-mps

https://www.theguardian.com/business...-and-its-board

Re: Carillion Crisis
 

http://www.bbc.co.uk/news/business-44129678

Not just the Carillion bosses.

Re: Carillion Crisis
 

Outsourcing, nearly always a bad deal for the tax payer.

Re: Carillion Crisis
 

But governments now and before keep telling us all how good it is Mr K.:rolleyes:

Re: Carillion Crisis
 

The real problem IMO is those doing the outsourcing contracts don't do the cost - benefit analysis properly so poor deals seem to be the norm.

As for those who should have been keeping tabs on these companies:

Re: Carillion Crisis
 

Shocker the financial services industry doing a lousy job and making profit as they fail upwards.

Re: Carillion Crisis
 

Now we have the East Coast rail-line train operators fiasco... Chris Grayling taken it back into government control.... Privatization seems to have failed here as well...

Re: Carillion Crisis
 

Public and private in the current state is not working we need to find a third effective way for our essential services and we also need to reduce the power of the financial sector or at the very least have true accountability with real punishments for anti customer performance. The big four accounting companies don't care right now as there is little in the way of real consequences when they act negligently or illegally and until someone's head is on a real block they won't change they will just pass client's around between them.

Re: Carillion Crisis
 

Looks to me like a lot of civil servants deserve a good kick up the backside over this debacle.

But as usual the tax payer picks up the tab. :mad:

Re: Carillion Crisis
 

You can be rest assured there will be more debacles to follow for the taxpayer to pick up the tab for...

Re: Carillion Crisis
 

FCA investigates allegations of insider trading at Carillion.

https://www.theguardian.com/business...g-at-carillion

Re: Carillion Crisis
 

More trouble ahead perhaps?

https://www.theguardian.com/business...-to-raise-cash

Re: Carillion Crisis
 

Outsourcing firm Interserve in rescue talks.

https://www.theguardian.com/business...-new-contracts

Re: Carillion Crisis
 

Capita next...

Re: Carillion Crisis
 

If the foundations are made of sand rather then hard rock the outcome is pretty predictable.

Re: Carillion Crisis
 

I fear that may be wishful thinking. I wonder who would employ a knuckle dragging TVL Bozo?

Re: Carillion Crisis
 

I think that we as a society are overcomplicating things because it appears cheaper. I say appears because if you look purely at normal outgoings , it is cheaper, but most people don't bother the factor in the costs of either not having the work done, or employing people (or a competing company) if the company providing your service goes t*ts up. It's also introducing more stuff to potentially go wrong.

For example, a school has a need for cleaning staff. These staff are a fixed cost, and will need storage space and equipment, all of which must be budgeted for. OK, so an outside cleaning firm will provide their own equipment, their own staff if the staff are based centrally, can service several schools with the same equipment and staff. Fair enough. That is cheaper. What if the company goes bankrupt? The school still needs cleaning, and it's unlikely the school will have the budget required for cleaners and equipment, even if they have the space required for storage. At least if the school goes bankrupt, they won't need any cleaners anyway.

I work in IT, and we are doing the same with systems, except it's worse because when you outsource a company critical system, you introduce not only the potential problems of what happens if the company hosting your critical system(s) goes bankrupt, but also miles of communications infrastructure than can go wrong, potentially taking out important systems for days. Most companies are unlikely to survive long without their critical IT systems.

Re: Carillion Crisis
 

The problem with outsourcing (especially IT) is that people think they are discharging the responsibility and oversight of the work being done, when in fact they are only outsourcing the transactional element of the work.

When it goes wrong, it’s still their responsibility, not the outsourcers (although the outsourcer gets the blame/a good kicking).

You can’t outsource a problem, it just ends up costing you more in the end.

Re: Carillion Crisis
 

And it seems HMG has not learned anything from the Carillion collapse at all.

https://www.theguardian.com/business...ing-unions-say

Re: Carillion Crisis
 

Makes you wonder how much the 'backhander' was . . and who to ;)

Re: Carillion Crisis
 

Being a intelligent man l will leave that to your imagination.;)

Re: Carillion Crisis
 

Well no one in Whitehall apparently reads Private Eye because if they did maybe,possibly they could count up how many times Carillion,GS4 and Capita have appeared for providing seriously poor service over and over and over again. So one has to wonder just who does benefit from this government/civil service inability to find anyone remotely good at the jobs provided.

Re: Carillion Crisis
 

3 months on and the dance continues . . Interserve: Key UK contractor faces crunch vote on rescue plan

https://www.bbc.co.uk/news/business-47575123


General Secretary of the RMT Union, Mick Cash, said bringing the contracts in-house would "avoid a repeat of the Carillion chaos."

"‎Once again we see the reality of bandit capitalism and its toxic impact on our public services. The time has come to end this obsession with the private sector speculators and return to the principles of public services run and owned by the public, free from this corrosive nonsense," he said.

Re: Carillion Crisis
 

No surprise at all sadly Carth.:rolleyes:

Re: Carillion Crisis
 

Yep, I sometimes wonder about the people that 'invest' in these things . . and whos money they are investing.

I hope it isn't part of my pension plan that's going down that hole . .

Re: Carillion Crisis
 

The die is cast now...

https://www.theguardian.com/business...deal?CMP=fb_gu

Re: Carillion Crisis
 

Interserve given 'public contracts worth £660m in run-up to collapse'

https://www.theguardian.com/business...up-to-collapse

Re: Carillion Crisis
 

I thought that shoring up failing companies was against the rules but successive governments seem to think that giving new contracts doesn't actually apply as actually supporting said companies.

Re: Carillion Crisis
 

Trouble is the Govt. Is reliant on these companies to provide Govt./ public services. Maybe they'll think again about outsourcing in future, but probably not !

Re: Carillion Crisis
 

Outsourcing in a lot of cases has been a clear unmitigated disaster IMO.