Don't get me wrong, the Tories have a lot to answer for and I expect back-scratching etc. went on (and heads should roll but likely won't), I just don't think it's as simple as they should have stopped awarding them contracts when they issued a profits warning
Carillon pension fund alone going to cost up to £900 million, and 100s of millions more to save the projects they're supposed to deliver
It's more that the relentless drive to outsource everything and push austerity has led to a situation where getting the lowest price is prioritised over everything else.
Newsnight quoted a government report that said the sector was pushed beyond viability and that cost savings in the short term, were lost long term.
Do we really want or need hospital beds, prisons, school dinners, probation services, school groundskeepers, forensics etc outsourced
Ah yes a bit of googling comes up for this for the Aberdeen road project, so you are right Carillion going under shouldn't effect it too much.
[i]Aberdeen Roads Limited (Balfour Beatty Investments Ltd, Carillion Private Finance (Transport) Ltd and Galliford Try Investments Ltd) was awarded the contract to build the AWPR/B-T in December 2014. It has appointed AWPR Construction Joint Venture, which includes Balfour Beatty, Morrison Construction and Carillion) to construct the 58km road.[/i]
Do we really want or need hospital beds, prisons, school dinners, probation services, forensics etc outsourced
It's about getting the right balance and that's where our current 2 main parties are a ****ing mess, the mantra is either all outsouced or all public. Neither is the optimum solution.
I have no issue with school dinners being outsourced, but there are clearly other areas where it doesn't work.
How much will it hurt Balfour Beatty ? They only just returned to profit last year after losses for the last 5 years.
edit looks like the bypass will cost them £45m
Employees paid for the pensions and if the government bail them out the state will have to pay for them as well
Carillon pension fund alone going to cost up to £900 million
Putting the pension in the PPF has no direct cost.
The PPF is funded by the member schemes themselves (and is in good shape). All DB schemes (except for public sector unfunded ones) are required to participate, basically paying for their own insurance. Taxpayer cash is not part of the pension "rescue".
http://www.pensionprotectionfund.org.uk/About-Us/Pages/About-Us.aspx
http://www.pensionprotectionfund.org.uk/levy/Pages/PensionProtectionLevy.aspx
Is the case here, Balfour Beatty have taken a hit as partners in Aberdeen. They announced yesterday they expect the knock on effect to cost them about £45M. They were also quick to point out that this was their only financial exposure to Carillion. They are obviously worried about their own value if they get tarred with this brush
It will be interesting to see if this changes the future nature of contracts. Government and the civil service won't sort the mess (lots will be said, nothing will be done), but industrial partners may start looking at these joint ventures and considering their risk exposure to other parties in the consortium.
speedy hire are owed 2 million and building mags saying small companies will not be repaid debts owed by carillilion, so a lot are going to fail, also a list of sites that work has stoped has been published.
It is obvious it is going to cost the
Tax payer millions, directly or indirectly.
Part of the problem is that we have a political elite who have little understanding of businesses, hide bound by treasury rules that insist on competition / lowest bidder with no incentive to invest. Businesses like construction and retail have thriven on minimum wages, supported by benefits to subsidise the real costs of doing business. Access to cheap labour from the EU has further disincentivised investment in skills and productivity. Many of the people making key decisions in Government are either civil servants or Whitehall flunkies who've never stepped outside of London. Everyone could see this coming, just that most chose to ignore it.
It's about getting the right balance and that's where our current 2 main parties are a ****ing mess, the mantra is either all outsouced or all public. Neither is the optimum solution.
As with just about every issue at the moment, the problem is that both our main political parties have totally abandoned any pretence to pragmatism, or evidence-based policy making, and are just now slaves to their respective (increasingly extreme) ideologies
Part of the problem is that we have a political elite who have little understanding of [s]businesses[/s] anything but politics
FTFY
evidence-based policy making
Has never been such a thing, because politicians don't understand evidence (statistical analyses can be quite in-depth) so they plump with whatever feels like it should be right.
Why is it government's fault Carillion went under? I don't think anyone held a gun to the heads of Carillion's board members telling them to make low ball bids for marginally/non profitable business. Were they totally incompetent or did they think that once they had the contracts they could re-negotiate? They should just have submitted sensible bids then if they were too expensive for the customer then the customer(govenrment) would have to re-think just like the rest of us do when we get a higher than expected estimate from our builder. Better no business than bad buisiness surely
Because it is a race to the bottom.
Amey has taken over the Carillion part of the CarillionAmey MOD JV so looks like this is the case.Dragon - if the Scottish government lawyers were smart enough (you never know!) then because the Aberdeen bypass is awarded to a consortium / joint venture the risk of a member of the consortium failing may (should) pass to the other members not the gov. No idea if that is the case, or how big Carillion role was in the whole project and what the end effect of that could be on the others who got into bed with them.
Amey has incorporated joint ventures with Carillion to deliver the Regional Prime and National Housing contracts for the Ministry of Defence (MOD), through the Defence Infrastructure Organisation (DIO). These contracts maintain the MOD estate in the UK.The terms of the joint ventures’ arrangements mean that Amey will continue the services now that Carillion has announced it is entering into immediate compulsory liquidation. Amey is committed to doing this and ensuring continuity of service to the DIO and MOD and the service men and women in the UK.
For the past few weeks, Amey has been working on detailed contingency plans with the DIO and the Cabinet Office to ensure it can effectively continue to manage the contracts and these are being implemented today.
Amey confirms it is fully prepared to continue the service obligation of the contracts without adverse effect on the employees of the joint ventures or the supply chain.
oldschool - Member
Dragon - if the Scottish government lawyers were smart enough (you never know!) then because the Aberdeen bypass is awarded to a consortium / joint venture the risk of a member of the consortium failing may (should) pass to the other members not the gov. No idea if that is the case,
Is the case here, Balfour Beatty have taken a hit as partners in Aberdeen. They announced yesterday they expect the knock on effect to cost them about £45M. They were also quick to point out that this was their only financial exposure to Carillion. They are obviously worried about their own value if they get tarred with this brush
Balfours £35 to £45m hit is not all on the Aberdeen bypass, we were also in JV's with Carillion on the M60/M62 works and the A14
A very measured and sensible statement was released to staff today from our CEO who has turned the company around in the last couple of years, a reminder how important positive cashflow is in this industry, something Balfours now enjoys
BB is a different company to what it was a few years ago, some real changes for the better have been made to how we approach bidding for and taking on work and how we manage projects through thier lifecycle, these will help minimise the fallout from our Carillion exposure. Its a shame Carillion didn't recognise their issues and put similar measures in place early enough, it only 2 years ago they launched a hostile takeover bid for Balfours
Quite a few of my friends and ex-colleagues worked there, several giving up 15+ years service elsewhere. I feel for them at the moment
Balfour Beatty have taken a hit as partners in Aberdeen. They announced yesterday they expect the knock on effect to cost them about £45M. They were also quick to point out that this was their only financial exposure to Carillion.
Well that is only their fault. Every business has to risk assess every contract they enter into and ask those 'what if' questions and make sure they have contingency plans in place to cover those what if scenarios. I'm sure Balfour Beatty will have done this and have a contingency plan waiting in the wings....you'd like to think.
Really all this public vs. private sector nonsense is just political posturing. As if everything ran super smoothly In the past under public ownership. It was even more of a car crash. And most of these projects would probably have never got off the ground in the first place.
In the past under public ownership. It was even more of a car crash. And most of these projects would probably have never got off the ground in the first place.
Yeah absolutely no hospitals or roads were built b4 the private sector stepped in, no school grounds were tended etc etc
I don't think anyone held a gun to the heads of Carillion's board members telling them to make low ball bids for marginally/non profitable business.
That is the magic of the free market, right there.
No, no-one made Carillion do this, but the conditions were created so that SOMEONE would always do it, and get away with it - and we are the ones who suffer from it because we get shit services whilst some rich bastard gets richer.
I've been involved in the negotiation of a few large government contracts and there's little concept of 'value' - they invite "innovation" but there's no incentive to invest in areas like infrastructure or skills, simply to strip everything out to deliver it at the lowest possible price. Treasury rules on capital vs expenditure means "invest to save" is a foreign concept. There's often no assessment of industrial capability to do the work - with little concept of risk because they can't account for it - bids are tendered at minimum scope, cost and margin and when something unexpected turns up, it goes to rats. It's been made worse by "long-term" investments often meaning no longer than the next general election because that's as long as they can commit funding and then policy U-turns. I've been in negotiations where the terms are technically illegal, but because they can't afford to seek specialist legal advice you either have to take the contract with the terms, or simply reject it, event though you've spent months bidding and mobilizing.
No, no-one made Carillion do this, but the conditions were created so that SOMEONE would always do it, and get away with it
Only they didn't get away with it they've just gone bust
@iain1775 - building mag reported that Balfours and Galliford Try will take a combined hit of £80 million on the Aberdeen bypass specifically.
Only they didn't get away with it they've just gone bust
I think the point is that senior management can run a company into the ground whilst trousering huge sums and face little to no consequences when the inevitable happens. Whilst I agree with the need for bankruptcy protection and limitation of liability, the directors of firms like this should shoulder more responsibility. Perhaps if they were liable to pay back a proportion of their salaries and bonuses for the past 5 years (on a decreasing scale say) in the event of liquidation they'd think twice about playing fast and loose with other people's livelihooods.
Only they didn't get away with it they've just gone bust
Don't kid yourself. This kind of thinking is why there will be public and government apathy a few weeks from now.
The facts are that people in charge of this company have been running this company into the ground, pulled out millions of pounds for themselves and will walk away.
Anyone with >1 years experience in construction (or any common sense) could see what they were doing and the mistakes that were made. Its the ££££££ > anything else mentality that makes me sick. Also, they are/were horrible to work for.
And Labour are.. Well bat shit crazy.
Compare the policies to what is used in many other countries and they aren't "bat shit crazy" left wing...
It's all relative
Only they didn't get away with it they've just gone bust
They definitely got away with it. They payed themselves well, took dividends, and they are now rich. Seems like a win to me?
Ok the company didn't get away with it but I take your point that the directors/senior management might and I agree there should be consequences for the directors if there has been failed corporate governance. Also such a monumental failure should make them unemployable as directors of even a corner shop in the future however unfortunaltely the executive recuitment market seems to operate like an old boys club.
From the Guardian today "At cabinet today Greg Clark, the business secretary, said the Insolvency Service had been asked to fast-track its investigation into Carillion directors."
I agree there should be consequences for the directors if there has been failed corporate governance.
I'd bet that would be pretty easy to wriggle out of though. After all, taking some risks is a legitimate business practice.
Do we really want or need hospital beds, prisons, school dinners, probation services, school groundskeepers, forensics etc outsourced
Our strategic Plasma production facility was sold off under Cameron, to a company founded by Wolfowitz. Cameron was then looking to take or did take a job in that investment group, one year later the plasma company was sold to a chinese firm for 10x what the government sold it for. Who says the UK isn't corrupt?
The company is still not profitable.
Our strategic Plasma production facility was sold off under Cameron, to a company founded by Wolfowitz ([b]wrong[/b]). Cameron was then looking to take or did take a job in that investment group ([b]probably wrong[/b]), one year later ([b]wrong[/b])the plasma company was sold to a chinese firm for 10x ([b]wrong[/b]) what the government sold it for. Who says the UK isn't corrupt? [b]People who get things wrong?[/b]
cite or #jambafact?
Yeah, my recall was wrong, they invested 100 mil.... they did not aquire it for 100 mil.
Apologies.
Also, Mitt Romney not wolfowitz.
gov sold its majority share to bain capital (mitt romneys company) for £200m
https://www.ft.com/content/d83ec55e-efc8-11e2-8229-00144feabdc0
cameron then got a job with em
https://news.sky.com/story/cameron-turns-to-buyout-firm-bain-for-post-downing-street-gig-10615948
which they sold for 830m to chinese company 4 years later (after a £50m investment)
The last experience I had of working for a company who were working for Carillion on a coulple of PFI schools , was that far from putting in low bids etc, that was the most profitable work we ever did (probably 50% more than normal rates)
Did help that my old boss was old skool Mowlem 😉
gov sold its majority share to bain capital (mitt romneys company) for £200m
So I was generally right?
That company is barely making more money than it was durung its 1st year under Bain. My feelings are that it was heavily undervalued if was sold for 200m. I reckon that land they have is worth half that value in itself, considering the amount of residential work going on in the area.
So I was generally right?
On the basis that pretty much every fact was wrong, I struggle to see how you could think that. Pretty much every government sale will look too cheap with the benefit of hindsight, it is hardly a surprise that highly incentivised people in the private sector are far better qualified at exploiting commercial opportunities than career civil servants. The company increased sales by 58%. £300 million to £820 miliion is a very good return but probably only about target. It is certainly nothing to do with corruption, do you honestly think Cameron would try to persuade Vince Cable to sell a company on the cheap for a speaking engagement?
1400 apprentices told to go home today, no redundancy or anything for them, royal liverpool hospital workers havent gone back to work.
You are right Mefty, it's likely not to be down to currption - ideology played a key role. The comoany will likely go under, or be broken up over the next few years. Creat were blocked from purchasing a US based plasma manufacturer due to national securuty concerns and now we risk not having our own supply of plasma. The marke for plasma is increasing becoming dominated by a few international players.
Even though that company increased output by 58%, they are still only just breaking even.
@iain1775 - building mag reported that Balfours and Galliford Try will take a combined hit of £80 million on the Aberdeen bypass specifically.
projected extra cash contribution to complete the job without Carillion is £60 to £80 million, any shortfall is shared equally
It was a project that was already in a degree of trouble Gallifords for example set aside £98m in May last year for troubled contracts including Aberdeen and Queensferry crossing
Balfours official statement detailing the three JV's so you don't have to rely on 2nd hand press interpretations - https://www.balfourbeatty.com/news/statement-regarding-balfour-beatty-s-joint-ventures-with-carillion-plc/
Channel 4 news is just reporting that a number of the directors*, who jumped ship after the last profits warning, will still carry on receiving their full (huge) salaries until October.
Isn’t corporate capitalism brilliant!!!
* one of whom was until recently an advisor to Downing Street on corporate responsibility
[url= https://www.theguardian.com/business/2018/jan/16/carillion-subcontractors-laying-off-staff-collapse?CMP=Share_iOSApp_Other ]Here we go[/url]. I think this might have been what I was referring to in the OP. 30000 firms at risk, no accurate picture of who is exposed, and contagion spreading. It’s going to end in another bailout. The alternative is chaos. Perhaps half a million jobs lost? And no doubt an instant recession. And this time Theresa May and her merry band of idiots in charge of sorting it out 🙂
Just in time for Brexit!
Buohahahahahh
Project -
I thought apprentices had the same employment rights as other staff?1400 apprentices told to go home today, no redundancy or anything for them,
Considering how damaging camerons privatisation of apprenticeships has been, It's not good for a country supposedly embarking on an economic rebirth, where we don't need immigrants
https://www.ft.com/content/3a85ac1c-7dd9-11e7-9108-edda0bcbc928
Radio 4 reported that carrilion directors had altered the claw back terms of their bonus payments in 2015/2016 - nice
And where are those directors now?
