The Carillion collapse could not be described as a shock. We recently reported on the likelihood of this happening. The UK government has now ordered an investigation into Carillion directors a bit late perhaps? The government has insisted that this investigation is to be fast-tracked. Carillion is the second largest construction company in the UK and its demise has come as a great shock to employees, subcontractors, clients and to the UK government.
Carillion Liquidation: Carillion Collapse Due to Many Factors
Carillion went into liquidation on Monday for reasons we have previously reported. It had faced massive losses on many of the contracts it was working on. It has been struggling with heavy debts accrued for a number of reasons. Greg Clark, the UK Business Secretary, has asked the Official Receiver to broaden and fast track the Carillion investigation. The directors responsible for the company’s actions at the time of failure will be closely examined.
Why The UK Government Did Nothing?
Carillion employs around 20,000 people in the UK, with 43,000 employees worldwide. At the time of its demise, it had 450 contracts with the UK government. One wonders why the government did nothing until the company folded!
Although the government has stated that any employees or contractors currently working on public service contracts will be paid, there are doubts as to the feasibility of this. Some large projects such as road and hospital construction are sure to be in doubt, no matter what the UK government says.
Small Companies Owed Money by Carillion
A large number of small companies are owed money by Carillion, and they are worried that their needs may come after those of the government. These small firms total around 30,000 and they are wondering when, or if, they are to be paid. Many of these may go the wall because of this issue.
The UK government will have some cutting questions to answer regarding the Carillion issue. These may particularly refer to how close the government came to Carillion. This is sure to become a tense and vicious political issue.
Was UK Government Too Close to Carillion?
Shadow Chancellor of the Exchequer, John McDonnell, opened the Opposition salvo by commenting that the proceedings of the meeting held between the government and Carillion should be made public. This was labeled a “Cheap Shot” by Liz Truss, Chief Secretary to the Treasury. If it is a cheap shot, why the reluctance to make the proceedings public?
We shall all watch closely how the aftermath of the Carillion collapse proceeds, and how an investigation into the Carillion directors is carried out. If any is carried out! Maybe the UK government had become too close with Carillion. What is fact is that the Carillion collapse is not only a disaster for the company but also perhaps for the UK government.