An investigation into the collapse of construction giant Carillion will be fast-tracked and “extended in scope”.
Business Secretary Greg Clark gave the order that will see company directors past and present probed to discover if they “caused detriment to those owed money”.
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Later on Tuesday, Mr Clark held a meeting with the leaders of the TUC and Unite trade unions.
He was challenged to offer a guarantee that no other major public service contractors will follow Carillion into liquidation.
Speaking after the meeting, TUC general secretary Frances O’Grady told Sky News: “One of the questions I put to Greg Clark was, ‘How can we be sure there isn’t another Carillion on the horizon?’
“And ‘Is the Government carrying out a proper risk assessment of its big public service contractors to make sure they are not going to collapse further down the line too?’
“I’ve left that question with him, but we’ll want answers.”
Image: Business Secretary Greg Clark says any misconduct would be taken ‘very seriously’
Questions about Carillion’s demise have centred on the Government’s decision to continue handing the firm public sector contracts even after the company issued a profit warning; while anger is also growing at bumper payouts to former bosses.
On the Government’s response to the crisis, Sky News’ Political Editor Faisal Islam said: “There is quite some concern about the immediate issue of small business creditors of Carillion, given the limited assets of the company to liquidate.
“Some estimates suggest that they will receive less than 1p in the pound on their debts to the contractor.
“In Government, the notion of pressurising the big banks to show some restraint in calling in loans to such companies is being debated.”
“Calls for a wider inquiry into private finance contracts is now being made well beyond Opposition benches and Jeremy Corbyn.
“Lord Lawson, the former Conservative chancellor, has called for a wider inquiry and some Government ministers unimpressed with being stuck with under-performing expensive contractors for many years want to be able to examine taking contracts back in-house.”
Image: Carillion went into liquidation on Monday morning
Carillion’s former chief executive Richard Howson was handed £1.5m in salary, bonuses and pension payments as part of his exit deal in 2016, with the company agreeing to carry on paying him a £600,000 salary and £28,000 benefits until October.
Labour leader Jeremy Corbyn has called for ex-Carillion directors to hand back the cash.
“Well the bonuses should come back,” he said.
“When there are people who are sub-contractors or small firms that are contracted into Carillion that are not getting paid, workers being made redundant at 48 hours’ notice, and less in some cases, the directors, for all the bonuses they have had, should pay them back.”
Mr Corbyn also demanded the halting of salaries for Carillion chiefs.
“They should not be paid anything at the present time because they have run the company in such a way that all these jobs are at risk,” he said.
“So many of our public services are at risk – school meals services, hospital cleaning services, maintenance contracts, Army housing, are all at risk because of the way this company has been run.”
Video: How did it come to this for Carillion?
Ministers have been left reeling after Carillion went into liquidation on Monday morning, with 450 public sector contracts on its books.
The 200-year-old firm employed 20,000 workers across Britain before banks pulled the plug.
Contracts it received included work on the HS2 railway, construction of new schools and hospitals, the building of the Aberdeen bypass and catering contracts with both schools and the Ministry of Defence.
Workers on public sector contracts have been told by the Government they should go to work and will still be paid.
But those employed on private sector contracts will receive no pay after Wednesday – unless other companies included on joint-venture projects step in to take them on.
As a result of Carillion’s collapse, Andy Bradley, managing director of landscape gardening firm Flora-Tec, has seen his company lose 15% of its turnover overnight, resulting in 10 of his staff being laid off.
He told Sky News: “I feel very let down that some of my people, some good people, some people that have got mortgages, have got families, they’re earning money to put bread on the table, have had to lose their jobs.”
Video: Who will be affected by the collapse of Carillion?
Announcing his intention to get to the bottom of Carillion’s demise as soon as possible, Mr Clark said in a statement on Tuesday: “It is important we quickly get the full picture of the events which caused Carillion to enter liquidation, which is why I have asked the Insolvency Service to fast-track and broaden the scope of the Official Receiver’s investigation.
“In particular, I have asked that the investigation looks not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors.
“Any evidence of misconduct will be taken very seriously.”
Mr Clark also told the Financial Reporting Council (FRC) to look into Carillion’s accounts.
Auditors should face questions over their “conduct and practice”, he said.
Downing Street confirmed public services run by Carillion are still being provided but insisted there was “no complacency” and the situation would be “monitored”.
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Prime Minister Theresa May’s spokesman said no taxpayer money was being used to bail out the company.
However, the cost of insolvency will be picked up by the Government.