Carillion: ‘National scandal’

Carillion dished out at least ÂŁ500m to shareholders over the seven years prior to its collapse, even as its pension fund deficit grew to nearly ÂŁ600m.

The analysis of Carillion’s books, undertaken by the House of Commons Library and commissioned by Labour, is a conservative estimate of the firm’s pension black hole.

A private analysis puts the figure at a whopping ÂŁ2.6bn.

Meanwhile transport secretary Chris Grayling awarded Carillion a ÂŁ62m contract in November, even though the Ministry of Defence had decided a month earlier to stop giving the indebted firm work.

A major profit warning had been issued in July – four months before Grayling handed the doomed company millions of pounds of public sector work.

Between 2010 and 2017, Carillion paid £500.1m to investors. But by the time the firm imploded its pensions deficit had grown from £200m in 2015 to at least £587m – with reports that the true figure could be much higher.

Shadow business secretary Rebecca Long-Bailey said, “It is a national scandal that Carillion paid out similar sums in dividends that could have filled the gaping hole in its pension fund.

“It also speaks volumes for the corporate governance that has been allowed to occur over the last seven years of Tory economic failure.”

Pension scheme raid

Troublingly, Carillion’s bosses made £225m raid on the pension scheme during the summer in an attempt to bolster the company’s finances.

The firm’s pensions trustees were forced to lower pension payouts, cut benefits and suspend payment for eight months.

Months earlier, the board had approved a ÂŁ79.3m dividend to shareholders.

“The Tories stood by and watched as Carillion’s greedy bosses sank the company while paying out massive dividends to themselves and shareholders at the expense of their employees’ hard-earned pensions,” Unite assistant general secretary Gail Cartmail said.

“The government has to shoulder its share of responsibility for the wreckage, which threatens to pull the jobs and pensions of thousands of workers under with it.”

She added, “It was ministers who, amid clear profit warnings, ignored the alarm bells and allowed Carillion’s top executives to continue steering people’s futures towards the rocks. “The government’s claim to be on the side of working people has been exposed as a pernicious untruth.”

Yesterday Labour forced a vote compelling the government to release withheld risk assessments on Carillion.