The Insolvency Service has announced that the former heads of now-liquidated construction giant Carillion will not be receiving their big bonuses.
Two hundred years of business came to an end on Monday as a result of Carillion’s mounting debt and unreliable government contracts. The fall has led to the cessation of work on its public sector construction projects, though the government has claimed that staff and contractors will still be paid.
Since making the decision not to bail Carillion out the government has been working to cushion the impact felt by around 30,000 smaller firms, many of which are still owed money.
As you can probably imagine, the idea that the company’s executives would still walk away with their pockets stuffed left quite a few sour grapes. Former chief executive of Carillion Richard Howson had been told he would continue to be paid his salary until October (along with £28,000 in benefits), while finance chief Zafar Khan was set to receive his £425,000 base salary until September.
Prime Minister Theresa May deflected accusations by Labour leader Jeremy Corbyn that Carillion had collapsed as a result of government negligence. She maintained that a third of Carillion’s government contracts, which have unreliable profit margins, had been agreed upon by the previous labour administration.
Even so, the Financial Conduct Authority has announced an investigation into the circumstances surrounding Carillion’s collapse.
Tim Roache, general secretary for union GMB, asked Business Secretary Greg Clark to set up a task force for the purpose of aiding private companies and employees suffering with the fallout of Carillion’s demise. He had previously described the government’s handling of the situation as “inadequate and inept.”
He said: "The clock is ticking for Carillion's 8,500 private sector workers, and the Government must now offer them reassurance and financial guarantees.
"No worker should go hungry, default on a bill or miss a rent or mortgage payment because of a crisis they did not cause."
With all the questions surrounding Carillion and the role of private companies in the public sector, MPs have been urged to review existing policies. A white paper is set to be published in the spring detailing new powers for the pensions regulator to punish negligent bosses.