Danny McCance 26 Sep 2018 12:46pm

Carillion could cost taxpayers more than £180m

The collapse of Carillon is likely to cost taxpayers in excess of £180m, including the remainder of PwC’s £50m insolvency bill

The Redundancy Payment Office may pay out up to £65m to former Carillion staff, £50m of which has already been paid, according to a report from Unite the Union.

The trade union made a Freedom of Information request to the Insolvency Service, revealing the extent of payments to former staff.

The Insolvency Service has since confirmed the figures, adding that these payments are funded from the National Insurance Fund.

Unite said that taxpayers will shoulder more than £100m costs of completing some of Carillion’s key projects, such as the Royal Liverpool Hospital and Midlands Metropolitan Hospital.

An Insolvency Service spokesperson said that Carillion’s contracts have all been either transferred to new suppliers or returned to parent organisations.

“The cost of completing any unfinished projects rests with the new owners,” the spokesperson said.

The relevant health trusts will therefore bear the costs of In the case of NHS construction projects.

The union also stated that because Carillion only had £29m upon its collapse the remainder of the £50m insolvency bill paid to Big Four Firm PwC will be picked up by the government.

Upon the collapse of the construction services giant, PwC was hired by the Insolvency Service to divide up Carillion and transfer its outsourcing contracts for around £50m, raising questions of potential conflicts of interest.

 “To date we have paid PwC, who we have employed as special managers to assist the Official Receiver with his liquidation of the Carillion Group, £22.9m,” the Insolvency Service spokesperson said.

“We estimate that special managers’ total bill is expected to be in the region of £50m, representing around 10% of the total gross costs of the liquidation,” they added.

In June, the National Audit office estimated that collapse of Carillion would cost taxpayers £148m, which at the time was expected to be covered by £150m provided by the Cabinet Office.

In March, PwC partners told the Business, Energy and Industrial Strategy (BEIS) and Work and Pensions Committee that it charged £20.4m for the first eight weeks of administration work on Carillion.

 In August, the firm revealed its specialist pension partners working on the insolvency of Carillion were paid as much as £1,156 per hour while directors were paid £1,060 per hour.

At the time, a PwC spokesperson said that the firm understood the “concerns over the cost of the liquidation, however, without this work the cost to UK jobs, the economy and the taxpayer would be considerably higher.”