Speaking of companies picking up Carillion’s contracts, analysts at Jefferies have been taking a look at the possible candidates. Here is their note:

MITIE 5% probability-weighted revenue upside. In our view, MITIE has the widest array of opportunities as it offers similar services to Carillion and has a considerably lower market share in public sector than private. Facilities management contracts at Heathrow Airport (where MITIE has provided services since 2010), Centrica (MITIE’s new CEO is ex-Centrica), Mapeley HMRC, Nationwide and Prisons FM all offer upside. Although balance sheet uncertainty and the FCA investigation into the timing of the September profit warning under previous management could count against it, the recent £525m Home Office immigration detainees escort contract suggests otherwise.

Serco 3% probability-weighted revenue upside, but 7-8% EPS impact due to current low margins. In December 2017, Serco signed a Business Purchase Agreement to acquire a portfolio of selected UK health facilities management contracts from Carillion for £47.7m. Carillion is now in breach of the BPA so Serco could walk away, renegotiate, or deal directly with the individual special purpose vehicle operating contract holders. In our view, management remains committed to completing the transaction, may accelerate transition from the original schedule, and seek dialogue with Carillion’s remaining healthcare contracts (up to £60m additional revenue). Elsewhere, Prisons FM, Hestia and Allenby/Connaught may also offer upside.

Babcock 2% probability-weighted revenue upside. In our view, Babcock could generate additional revenue from two areas: 1) Almost ten years ago, Network Rail transferred business to Babcock after the demise of Jarvis and £30-40m of Carillion’s track renewal and electrification business could follow a similar path; 2) The Next Generation Estate Contracts as Babcock previously operated two regions and has a long-standing, deep and supportive relationship with the MoD. Although it will wish to be a supportive partner to the MoD, these contracts were loss-making and require viable economic terms.

Sodexo 1% probability-weighted revenue upside. In our view, Sodexo also has a wide array of opportunities including facilities management contracts at Mapeley HMRC, Nationwide, Prisons FM, Hestia, Northwood Joint Permanent HQ, and Allenby Connaught PFI. However, the probability-weighted impact on group organic revenue growth would be a mere 1%.

There are several companies which could replace Carillion on public contracts, says Fitch Ratings, but any additional costs will depend on the individual project. The ratings agency - which did not rate Carillion and says the engineering and construction sector is generally sub-investment grade - said:

The implications of Carillion’s collapse for the UK PFI/PPP sector will vary between projects. There are several companies that could replace Carillion on individual projects, but replacement costs on construction projects will depend on how advanced construction is, and on how much money, if any, is owed to sub-contractors.

Similarly, the availability of suitably qualified replacement operators and the project’s ability to absorb the potential for increased costs and delays if the operator is replaced, is an important consideration in our project ratings analysis. Fitch does not rate any PFI/PPP project that has Carillion as a contractor or service provider. The fact that the company has gone into liquidation suggests there is no value in some of its existing contracts and that they were under-priced. This implies that replacement costs will have to compensate the new contractor/operator for that under-pricing.

Carillion had a number of joint ventures with other established construction companies which should be well-placed to understand replacement risk. If Fitch considers the availability of substitute operators unlikely, given the specialised nature, size, or location of a project, our rating may be capped at that of the operator.

Education select committee chairman Robert Halfon wants to know what impact Carillion’s collapse will have on schools and the 1,400 apprenticeships run by the company. He has written to education secretary Damian Hinds, saying:

Given the scale and nature of the services provided by Carillion to almost 900 schools and colleges, it is essential that the impacts of the firm’s collapse are understood and steps taken to ensure the continuity of services such as school catering and facilities management across the country.

First he loses his bonus and now he loses another job.

Former Carillion chief executive Richard Howson has just resigned as a non-executive director at oilfield services company John Wood Group.

The government has welcomed the emergency support that banks will provide to help smallercompanies affected by Carillion’s liquidation.

Away from Carillion and over to Canada, where the central bank has raised interest rates from 1% to 1.25%. Economist James Knightley at ING gives the background:

The Canadian economy is strong and inflation pressures are rising, hence why the BoC hiked. But fears over the future of NAFTA are causing concern. This is key for the future path for interest rates

Following a raft of strong activity data and a pick-up in inflation the Bank of Canada raised the target for its overnight rate to 1.25%. This was broadly the view amongst economists and in financial markets, which had swung behind the idea of a rate rise following two consecutive bumper Canadian jobs reports and stronger inflation readings.

This was reflected in the accompanying statement, which stated that “labour market slack is being absorbed more quickly than anticipated”. It also highlighted strong data, inflation being close to target and the belief that the “economy is operating roughly at capacity” as reasons to raise interest rates.

They are expecting to see a slowdown in 2018, but have had to acknowledge that “growth is expected to remain above potential through the first quarter of 2018”.

Nonetheless, there are clearly risks, most notably the potential for Donald Trump to pull the plug on NAFTA. US-Canadian trade flows total an amount equivalent to 32% of Canadian GDP so disruption would be very bad news. Uncertainty on this issue is “clouding the economic outlook” according to the statement, which is likely to weigh on business investment and trade in their view.

Consequently, the BoC still see the need for “some continued monetary policy accommodation” and warn that the Governing Council will “remain cautious in considering future policy adjustments”. Despite this the “economic outlook is expected to warrant higher interest rates over time”.

We certainly agree and see further upside to Canadian growth given the improving global backdrop and rising commodity demand. We are also encouraged by Trump’s recent comments, hinting at a growing willingness to work with Mexico and Canada on a NAFTA compromise. As such we are predicting a two more 25bp hikes in the second half of 2018.

Here is the Press Association story on the Carillion directors’ bonuses:

Bonus payments to directors and former executives at collapsed construction giant Carillion have been stopped.

The move came amid political anger about bumper payments to executives who had been in charge as the firm headed for the rocks. The Insolvency Service said payments, including those included in severance packages for former executives, had been halted after the firm went into liquidation on Monday...

At Prime Minister’s Questions, Labour leader Jeremy Corbyn lashed out at the “wildly excessive” bonuses paid to directors.

Carillion’s former chief executive Richard Howson pocketed £1.5m in salary, bonuses and pension payments during 2016 and, as part of his departure deal, Carillion agreed to keep paying him a £660,000 salary and £28,000 in benefits until October.

Former finance chief Zafar Khan, who left Carillion in September, was due to receive £425,000 in base salary for 12 months.

Interim chief executive Keith Cochrane was due to be paid his £750,000 salary until July, despite leaving the company in February...The Prime Minister said the Official Receiver’s investigation into the firm would “look into the conduct not just of current directors but also of previous directors and their actions”.

It was possible to take action to claw back bonuses that have already been paid, she indicated. “The Official Receiver does have the power to ensure that, in reviewing payments to executives, where those payments are unlawful or unjustified he can take action to recover those payments,” the Prime Minister said.

Was there a discussion about the profit warning within the department?

Heaton says we were aware of the growing worrying signs from Carillion so we stepped up our contingency planning.

The committee moves on to other issues.

Heaton is asked about the costs to the taxpayer.

He says this is unknown. We need to pay the official receiver for services , there may be additional costs, dislocation costs or costs of stabilising the services.

Heaton is asked what steps and contingency plans were taken, given Carillion’s profit warning in July.

He says the contract was not an easy one for Carillion and the services we were getting weren’t perfect so we were working very hard to manage the contracts.

Plus we were doing contingency planning for this very outcome, looking at bringing it in house or getting new owners etc.

Heaton said the priority was business continuity, vital services being maintained.

Michael Spurr, chief executive of the prison and probation service, said Carillion staff continued to work. Talks are going on with the official receiver.

Spurr says, we have staff on site and we have directly employed staff we can deploy to make sure services can continue [while discussions with the official receiver go on].

Transport secretary Chris Grayling has also defended the government’s decision to hand contracts to Carillion even after its profit warning, says ITV.

Grayling said all work was given to consortia rather than individual companies, including the contracts for the HS2 rail link. He told ITV News:

It’s been clear for sometime that Carillion’s had issues, many construction firms have had issues over the years. HS2 did not have a contract on this project with a single company, it contracts with consortia; the whole consortia, the whole joint venture is responsible for delivering the project.

It’s not for government, it’s not for HS2 to exclude firms, possibly pushing them under, because of the impact on their business, arguably illegal to do so, because there’s no legal reason to exclude them.

Theresa May’s spokesman has confirmed that 90% of Carillion’s private sector clients want to keep employing its service.

That means that most staff will keep being paid (at least in the short term while the Official Receiver deals with the situation).

Andy Bell of Channel 5 News says its good news:

The FT’s Jim Pickard agrees:

But Noble Francis, economics director of the Construction Products Association, argues that Carillion staff in the building industry need more help:

Speaking of job losses, a Bank of England policymaker has suggested that UK unemployment will actually keep falling.

Michael Saunders used a speech in London this morning to suggest Britain’s record-beating unemployment rate, already at its lowest point since the mid 1970s, can fall even further still.

Although most economists now think the jobless rate could have reached its nadir at 4.3%, comparable with the level in June 1975, as the economy begins to slow, Saunders said it could reach 4% in 2018, or fall even further still.

Saunders, who joined the committee just three days after August’s emergency Brexit package was unveiled, also said it was his “hunch” that workers’ pay would rise further than most people expect this year.

Wages could go up to about 3% and probably a little higher next year, he said.

All of this would have implications for interest rates rising further, as the Bank has kept a watching brief on pay growth, waiting for wages to rise before it can hike the cost of borrowing even further still, after its first rate hike in a decade in November.

However, all of this is very much inkeeping with Saunders’ previous comments that low levels of unemployment should lead to pay growth, which he has used before to justify voting for higher rates. The City is unlikely to view this as a key moment that will inform the next decision from Threadneedle Street, due on the 8th February.

Jeremy Corbyn also laid into Theresa May over wider issue of privatisations.

He argues that the system is broken, and that the “costly racket” of employing firms such as Carillion, Capita and Virgin to run privatised services must end.

In response, May accuses Labour of putting “politics before people” through its opposition to businesses, and points out that a third of Carillion’s contracts were signed under Labour.

Here’s my colleague Andy Sparrow’s snap verdict, from his Politics Live blog.

PMQs - Snap verdict: One of the best PMQs for ages, with strong, detailed questions, the prime minister being properly held to account, and Corbyn and May using the exchanges to make big, political arguments.

Corbyn comfortably come off best - he has the wind behind him on this issue - but May managed to pull it back a bit with her final answer. Until then, although clearly across the detail of her brief, she struck the wrong tone in at least two places. Refusing to engage with Corbyn second question just because it did not conclude with a question mark sounded petty, and her repeated insistence that the government was just a “customer” of Carillion, while technically correct, made her sound rather feeble.

She’s not just a customer - she’s the prime minister, armed with the full power and authority of the UK state. May came to office promising a crackdown on excessive corporate and a bolder and more imaginative PM would have use the Carillion catastrophe to reboot this whole agenda. Surprisingly, May did not even try to do this, and her response to Corbyn’s question about what the Carillion directors are receiving sounded correct but uninspiring. That paved the way for Corbyn’s powerful final question/soundbite, a tirade against the whole private sector contracting “racquet”. It was his best moment. May’s final answer was her most effective too.

Her argument about Corbyn and McDonnell being fundamentally anti-business is persuasive enough to have some traction, but attacking New Labour for putting these contracts out to tender in the first place was probably a mistake. If anyone is going to get credit of opposing New Labour neoliberalism on an issue like this, it’s not going to be May, but Corbyn.

Labour leader Jeremy Corbyn also challenges May about Carillion.

Q: Why did the government hand Carillion £2bn of contracts after it had issued a profits warning last summer?

May explains that a profit warning means that a company is going to make lower profits than expected (indeed...)

If the government pulled out everytime a company issued a profits warning, it would ensure that companies failed and jobs were lost, May says. And it would interrupt public services.

Corbyn hits back, saying it’s the government’s responsibility to ensure that Carillion is being run properly.

He says the government either handed Carillion contracts to keep it afloat (a strategy that failed) or it was simply negligent.

There’s a lot of rowdiness in the House of Commons, as Corbyn points out that hedge funds were betting against Carillion even as the government was meant to be monitoring it.

Q: Why did the government withdraw its Crown Representative (a key oversight role) from the Carillion crisis last summer?

May says there is now a new Crown Representative in place, replacing the one who left. In the interim, the government’s chief commercial officer and the cabinet office director of markets and suppliers took over those responsibilities -- so it’s not true that the government didn’t have oversight.

They clearly weren’t looking very well, Corbyn shoots back (cue laughter on his back benches)

Carillion went into liquidation with debts of £1.29bn, and a pension deficit of £600m, he points out.

As expected, Carillion is a big issue at PMQs (liveblog here)

Here’s a flavour:

Q: How will the government guarantee that Carillion’s apprentices are kept employed to complete their apprenticeships, and paid?

Theresa May says she understands that it has been a “difficult time” for many people, who are worried about their jobs and pensions.

She says those who work for Carillion in the public sector should keep turning up to work, and they will be paid.

But the government isn’t running Carillion - it is a customer of Carillion.

May reassures the House of Commons that the government is “looking very carefully” at the issue of apprentices.

Over in parliament, Prime Minister’s Questions is about to start.

I imagine Carillion’s liquidation might come up.

Our Politics Live blog is tracking all the action, but I’ll keep an eye too:

Labour MP Jon Trickett, Shadow Minister for the Cabinet Office, is concerned that the Cabinet Office is keeping a close eye on Interserve’s finances.

Trickett argues that the government was reckless in awarding new contracts to the firm, even after it posted several profit warnings last year.

“The Government awarded Interserve numerous contracts after significant profit warnings, clearly showing us that Carillion was not an isolated case.

“The Tory Government is wedded to a dogma which would rather see public services in private hands, so their shareholders cream off the profits and the British people pick up the bill.

“Even when these huge firms are in unstable positions, the Government would rather risk our services than actually run them for the public .

“The time is up on the few profiteering at the expense of the many.”

Here’s our news story about Interserve:

Interserve is not the next Carillion, says UK government

Incidentally, Interserve warned in October that it could breach the conditions agreed with its lenders, after a profit warning.

Richard Fletcher of The Times points out that the warning signs have been building for a while...

Interserve is like Carillion in one respect -- it may not be well known to the public, but it has a significant role in UK public life.

It employs 80,000 worldwide, including 45,000 in the UK. It plays a role building offices and car parks, and offers cleaning, catering, security and maintenance services to a range of organisations.

It is also Britain’s largest provider of probation and rehabilitation services in England and Wales, and supervises approximately 40,000 medium-low risk offenders at any one time.

And also like Carillion, it has kept winning government contracts after posting profit warnings.

Press Association’s Ben Woods explains:

Despite flagging financial troubles towards the end of last year, Interserve has landed a number of hefty wins, including an extension on facility management services at the BBC worth £140m and a £227m Government contract to provide similar services for the Department for Work and Pensions.

Breaking: The World Economic Forum has highlighted the threat to environment in its annual Global Risks report.

The WEF says that the upturn in growth has led to economic risks being downgraded.

But concerns are rising over extreme weather events, natural disasters, failure to adapt to climate change, biodiversity loss and man made natural disasters.

Many of the experts surveyed by WEF also singled out ‘weapons of mass destruction’ as a key risk.

Worryingly, many of the business leaders, economists and politicians who took part in the Risks report also expect military conflict to become a bigger risk this year.

Interserve shares are recovering some of their losses, following that vote of confidence from the Cabinet Office.

They’re now down just 4%.

Neil Wilson of ETX Capital insists that Interserve is “no Carillion”, following the FT’s report about Cabinet Office concerns this morning.

He writes:

It’s one of the most heavily shorted FTSE stocks and it has a lot of debt. Net debt was c£513m at year-end but is set to peak in the first half of 2018 as a result of refinancing, restructuring and cash flows phasing from its energy to waste contracts that were the source of the original profits warnings.

However in the case of Interserve, the arithmetic doesn’t look anything like as bad as Carillion. Even if net debt tops £600m in H1 2018m, its market cap as of Tuesday’s close was £176m, although this is likely to be lower today. Carillion was facing oblivion as its market cap declined to just £61m against liabilities of c£1.5bn.

It’s been winning contracts too, although as Carillion reveals, this doesn’t mean an awful lot if the lenders are ready to pull the rug out.

Reuters’ Jamie McGeever points out that Interserve’s share price is often volatile, as investors weigh up its financial strength:

Here’s that domino effect in action: