@cchris – I fear that many subbies will lose significantly and force some into administration.
I worked with several Carillion directly employed PMs, senior PMs, QS’, MQS – all good guys; having said that as soon as you look at the people who are/were one or more steps removed from project delivery it was a different story. With every step further away from project delivery the worse it was.

PwC have been retained by Gov to advise on disposals etc. That is anything but reassuring. PwC, EY and the other audit/consulting advisers – aka vultures – specialise in playing off both ends against the middle; they are duplicitous, lying, venal, amoral, deceitful, dishonourable. Other than that they’re (possibly) ok.

Carillion played by the rules.
Message is clear – the rules are in need of a major rewrite.

Lidington says ‘…day1 has gone pretty well’; what a lying scrote.

@epic you should go and live somewhere without any companies and where products produced by companies are not available. The Amazonian rainforest springs to mind.

@mols all those skilled people will be available to be hired by someone else now. If these contracts where run by Government / state you’d have pension costs close to treble those of the private company. Costs to the state would be much higher.

Jamba – Carillion were a ‘management contractor’ who won jobs and then subbed out all of the work packages; they project managed scheme delivery.

You wrote…..@mols all those skilled people will be available to be hired by someone else now. If these contracts where run by Government / state you’d have pension costs close to treble those of the private company. Costs to the state would be much higher.

Fact – guys on the tools in sub contractors are hugely at risk.
TUPE rights will disappear.
A replacement contractor on a project will not just accept the design developed by Carillion irrespective of what stage the delivery has reached; they will be looking for indemnities and warranties.

Lidington sounds calm but I doubt he has a clear understanding of the details – and PwC will make the right noises to suit their corporate objectives which include long term revenue streams and enhanced profitability.

mols all those skilled people will be available to be hired by someone else now. If these contracts where run by Government / state you’d have pension costs close to treble those of the private company. Costs to the state would be much higher.

Well firstly, state run businesses don’t NEED to have high pension costs, do they? It was part of their recruitment model. Indeed, I am not sure they still give civil servants massive pensions anymore, do they?

Secondly, there’s going to be a shitload of upheaval, misery and insecurity for everyone involved – service consumers and providers.

Thirdly, don’t talk about pension costs when Carillion were raiding the pension pot. Employees paid for the pensions and if the government bail them out the state will have to pay for them as well. Meanwhile tons of cash was siphoned out of the system into rich people’s pockets.

This is a shit show from top to bottom, it’s utterly indefensible Jam.

That would make sense, epic, but is it true? Do you have any links, surely it would be all over the news if it was that transparent, or maybe not.

It is a fact that the government gave contracts after three separate profit warnings. Not sure about the donor bit but it should be pretty easy to confirm.

How much will this cost the taxpayer?

Government minister on Newsnight refused to say it would cost anything, analysts seem to think it will cost millions.

Plays into Corbyns hands, renationalisation was already popular with voters.

jambalaya – Member

@epic you should go and live somewhere without any companies and where products produced by companies are not available…

Quite happy to have companies. I’ve owned a few.

But they need to be kept under control and not allowed to work against the interests of the people of the country, ie make it as near impossible as possible for cowboys to run them.

@kimbers – far too early to make the vaguest guesstimate on that one.
Will take years to properly unwind and quantify.
This will be the biggest hit yet on the PPF; uncertain business/economic future – Brexit et al; likely that PPF levy will increase.
I hope this leads to a full review of whether or not PFI works in the ‘public interest’ rather than the interests of a small number number of companies who transfer the benefit to their shareholders.
PFI was well intentioned but the law of unintended consequences resulted in unintended beneficiaries coining it.
Corbyn & McDonnell will never bring all PFI contracts back under Gov control if labour become the governing party; there are too many, the cost will be enormous, the complexity of unwinding some of the contracts is beyond their capabilities.
They could bring some under Gov control but most will remain unchanged and run their course.
Major review and restructuring of how new contracts will operate is required.
Look at McQuarrie – australian banking/outsourcing company; only in uk because of PFI. There are many others.

Cameron knighted Green in 2014 ( for services to business) he was a Tory supporter who was one of the 100 captains of industry that wrote a letter in the 2015 election saying we should all vote Tory and that voting labour would put jobs at risk

http://www.telegraph.co.uk/news/politics/labour/11507586/General-Election-2015-Labour-threatens-Britains-recovery-say-100-business-chiefs.html

May took him on board to advise on responsible business, despite having been found of illegally blacklisting
Not sure of greens donated to them

Government minister on Newsnight refused to say

So technically we have our answer already.

Corbyn & McDonnell will never bring all PFI contracts back under Gov control if labour become the governing party; there are too many, the cost will be enormous, the complexity of unwinding some of the contracts is beyond their capabilities

That’s not stopped the Tories from pursuing Brexit 😉

As an official stw lefty even id not want to see everything under gov control, but would like to see nationalised providers as an alternative in the right industries.

Kimbers – Osbo was photographed innumerable times in branded PPE with every company he thought may support the tories
As for the blacklisting, I’m sure you’re aware that the full list is very lengthy; Carillion were on the list as were most, if not all, of the UK’s tier1 civils and construction contractors.

Mattyfez – ‘refused to say’ means ‘I don’t have the slightest idea’.
As I posted ^^^ this will take tears to unravel and quantify.

It will take years – as well as tears – to unravel.

Kimbers – don’t disagree with your view about tories and brexit.
Tories have proved themselves to be generally incompetent in Gov.
I don’t believe that labour have any higher level of competence.

So Corbyn thinks have an unprofitable construction company publicly owned is a good idea, really?

Have the Scottish government had much to say yet, as it was Transport Scotland that awarded the Aberdeen bypass contract, and that seems to be one of the projects that’s gone wrong financially at least.

It is a fact that the government gave contracts after three separate profit warnings. Not sure about the donor bit but it should be pretty easy to confirm.

The way I understand it. The government kept giving them the contracts in the hope the banks would continue to extend/renegotiate the finance, the banks did not do either as they wanted/expected the government to provide a bailout as they believed Carillion was too big to fail and the government would step in.

So Corbyn thinks have an unprofitable construction company publicly owned is a good idea, really?

Saying much of the work should never have been outsourced in the first place.

Forced to bid so low it’s unviable, now employees & taxpayers suffer, for the short term ‘benefits’ of austerity.

As I said doing Corbyns work for him

We need a moderate centrist government like the lib dems.

The tories are.. Well bat shit crazy.

And Labour are.. Well bat shit crazy.

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.

IHNRAT but I saw a mention this morning a suggestion that lots of contractors worked through umbrella companies (no great surprise based on the STW experience). Where does the liability lie for paying the subbie then? Could it take a few umbrella co’s down with it? (No bad thing).

I wonder how many people would be having a go at the Tories if they stopped giving Carillion contracts months/years ago when they issued profit warnings and the company went under then – I bet a lot of people would be saying they probably would have survived if they hadn’t had the rug pulled from under them etc.

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

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

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.

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.

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 f**King 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 f**King 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 businesses 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.

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 taken over the Carillion part of the CarillionAmey MOD JV so looks like this is the case.

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