The Chancellor of the Duchy of Lancaster has today made the following Written Ministerial Statement.
On Monday 15 January 2018 I notified the House of the steps taken by the Government in regards to the compulsory liquidation of Carillion plc.
Throughout this unfolding situation the Government has prioritised the continued delivery of public services. Taxpayers should not, and will not, bail out a private sector company for private sector losses or allow rewards for failure.
The failure of this company has understandably caused concern for many people over their jobs, their pensions and their local services. The court has appointed an Official Receiver from the Insolvency Service who has taken control of the delivery of public services contracts and we are supporting them to do so. We will support the Official Receiver to provide these services until a suitable alternative is found, either through another contractor or through in-house provision.
I would like to provide further reassurance that all employees working on public services should continue to turn up to work, as they have been doing since the announcement of the liquidation, confident in the knowledge that they will be paid for the work they are providing.
In order to safeguard our public services, we have been implementing contingency plans that have been developed since July 2017. Since I last updated the House, there has been no significant disruption to service delivery in schools, hospitals, prisons, defence and other public services as staff have continued to provide services. We have been engaging with all devolved administrations with exposure to Carillion to ensure that robust contingency plans are being implemented.
A number of Carillion’s joint venture partners such as Kier, Eiffage, Balfour Beatty, KBR, Amey and Galliford Try have committed to stepping into the respective public sector contracts to ensure continuity of these vital services. Public sector construction sites have been secured and construction will begin following the appointment of a new contractor. I would like to express my thanks to all those who have worked hard to ensure the continuity of public services.
Over 90% of Carillion’s private sector facilities management service customers have indicated that they will provide funding for the Official Receiver to maintain interim services while new suppliers can be identified to deliver these, ensuring the retention and employment of staff on these contracts. In addition, we are making sure the usual level of support from Government to affected employees is available from JobCentre Plus, the Department for Business, Energy and Industrial Strategy, the Pension Protection Fund (PPF), HMRC and also dedicated websites from the Insolvency Service.
At present, seven Carillon pensions schemes, covering 6000 members, have moved to the Pensions Protection Fund Assessment period, this occurs automatically when all the sponsoring employers become insolvent. The remaining 21,000 members are in schemes which have at least one sponsor not in insolvency, and are therefore not in the Pension Protection Fund (PPF).
Where pensions have moved into the PPF, the PPF is making sure current pensioners continue to receive their pensions at 100% of their usual rate, and are assessing the eligibility of Carillion’s pension schemes to enter the PPF to protect current employees’ future pensions. We have also set up a special additional helpline with the Pensions Advisory Service for members of Carillion’s pension schemes (0800 7561012). We have responded to over 500 calls to the Pensions Advisory Service line since it opened last week.
The Construction Industry Training Board (CITB) has worked with the Education and Skills Funding Agency to ensure funding is available to support former Carillion apprentices. Over 1400 apprentices have been contacted and the CITB is offering every former Carillion apprentice a face-to-face session with CITB Apprenticeships to find out their individual learning needs. To date, the CITB have matched 400 Carillion apprentices to new employers, and they continue to assess the industry offers they have received to find placements for the remaining Carillion apprentices.
HMRC will provide practical advice and guidance to affected businesses in Carillion’s supply chain through its Business Payment Support Service (BPSS). The BPSS connects businesses with HMRC staff who can offer practical help and advice on a wide range of tax problems, providing a fast and sympathetic route to agreeing the best way forward and addressing immediate concerns with practical solutions. HMRC has also offered to provide affected families with cash support through the tax credit system and has published details on how to contact them to arrange.
The Secretary of State for Business, Energy and Industrial Strategy [Rt Hon Greg Clark MP], Economic Secretary to the Treasury, [John Glen MP], and Parliamentary Under-Secretary of State for Business, Energy and Industrial Startegy [Andrew Griffiths MP], met with several banks on 17 January 2018 to seek assurances that they will support small businesses affected by Carillion’s liquidation. Lenders are contacting customers and, where appropriate, are putting in place emergency measures, including overdraft extensions, payment holidays and fee waivers to ensure those facing short term issues can be helped to stay on track. Three lenders have made a fund of £225m available to support small businesses exposed to Carillion’s liquidation. Furthermore, the Secretary of State for Business, Energy and Industrial Strategy has set up a taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation on construction firms, particularly SMEs and those working in the sector. He chaired the first meeting of the taskforce on 18 January 2018 and will be holding a further series of meetings with stakeholders in the coming weeks.
The Official Receiver has also taken immediate action to stop severance and bonus payments to former Directors. The Secretary of State for Business, Energy and Industrial Strategy has written to the Insolvency Service and the Official Receiver asking that the statutory investigation into the conduct of Carillion’s directors is fast-tracked and extended in scope to include previous directors. He has also asked the Financial Reporting Council to conduct an investigation into the preparation of Carillion’s accounts past and present, as well as the company’s auditors.
Officials in my department have been in touch with various members’ offices last week following their queries through the dedicated helplines we set up. I shall be holding drop-in sessions for members to meet with Cabinet Office ministers and relevant officials to answer any further queries. Alongside ministerial colleagues, I will keep the House updated on this ongoing situation.