Government ‘is keeping a very close eye’ on struggling Carillion

Queen Alexandra Hospital
Queen Alexandra Hospital
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Ministers are keeping a very close eye on the crisis with construction giant Carillion, the Tory Party chairman has said, amid reports it is nearing collapse.

Brandon Lewis said the future of the struggling company was a going concern as major public sector projects face being plunged into chaos by its demise.

Government sources confirmed a crunch meeting was taking place with officials from across Whitehall on Sunday to discuss the problem.

Carillion is a key supplier to the government and has contracts in the rail industry, education and NHS.

It provides facilities management services at Queen Alexandra Hospital, for Portsmouth Hospitals NHS Trust, where is contracted by the PFI consortium that rebuilt the hospital.

When asked about Carillion’s current position, the hospital trust said on Friday that it has ‘extensive plans’ in place as part of normal contingency planning.

Carillion has met lenders to discuss options to reduce debts, recapitalise and/or restructure the group’s balance sheet.

Administrators could be called in as early tomorrow unless shareholders, creditors or the government agree to stump up the funds required to save it, according to reports.

Mr Lewis told BBC1’s The Andrew Marr Show: ‘It is a going concern, it’s a very commercially sensitive situation so I wouldn’t comment further than to say it is a going concern.

‘I would hope to see that the working capital they need will be there, working with their partners.

‘But of course ministers and my colleague the Secretary of State at Business is keeping a very close eye on it.’

Carillion has struggled since reporting half-year losses of £1.15bn and a meeting was held on Friday to discuss its pensions deficit.

The Rail, Maritime and Transport (RMT), Unite and GMB unions all called for workers’ rights, including pensions, to be protected as a priority.

Jon Ashworth, Labour’s shadow health secretary, warned the collapse of Carillion could badly affect the health service, where it is running several building projects along with facilities management at a handful of hospitals.

He told Sky News: ‘I think we need some urgent clarity from the government about whether, if Carillion sadly goes under, those hospitals will be able to provide meals to patients on the wards this winter.

‘I’m asking for the government – Jeremy Hunt, the Health Secretary, or a Government minister – to come to the House of Commons tomorrow and give us that clarity and give piece of mind to patients.’

A Labour government would want to bring such contracts back into public control, Mr Ashworth claimed.

He said: ‘I think there is a broader issue about why government contracts have been going to Carillion in recent months when there have been significant warnings. I know we need some answers on that from the government.

‘There’s a broader point here: have we now gone too far in handing out contracts which should be delivered by the public sector to some of these private sector firms?

‘If they do go under and there are hospitals struggling to provide the catering services, to provide the meals that patients need in those hospital wards, I think that’s a serious question about whether the model of outsourcing so much is the right model for this country - I would say it is not.’