THE collapse of Carillion will cost UK taxpayers an estimated £148 million, a new report has revealed.
An investigation by the National Audit Office (NAO) into the UK Government’s handling of the situation arrived at that figure, though said it is subject to a “range of uncertainties” and it could take years to establish the final cost.
There will also be “significant costs” to the supply chain, former Carillion employees and investors. The NAO said around 64% (11,638) of the Carillion UK workforce had found new work. At the point of liquidation, Carillion had around 420 contracts within the UK public sector.
The investigation identified that the Cabinet Office began contingency planning for the possible failure of Carillion shortly after the firm posted its first profit warning in July 2017. The NAO said the scale of the profit warning “came as a surprise” to the government, as it contradicted market expectations and information that had been provided by contracting giant. The contingency planning was accelerated in October and was complete across central government by mid-January when Carillion went into liquidation.
Amyas Morse, head of the NAO said, “When a company becomes a strategic supplier, dependencies are created beyond the scope of specific contracts. Doing a thorough job of protecting the public interest means that government needs to understand the financial health and sustainability of its major suppliers, and avoid creating relationships with those which are already weakened. Government has further to go in developing in this direction.”