The Metro has former Carillion boss Richard Howson in its sights, as he owns a six-bedroom ski chalet in the Alps....

Our latest Carillion story, about the strain on suppliers, is on tomorrow’s front page:

Accountancy firm PwC is under scrutiny tonight over its involvement in Carillion’s collapse.

PwC staff were appointed as ‘special managers’ yesterday, to help the Official Receiver run the company. But the firm doesn’t come to the crisis with a blank slate - last year, it was advising Carillion’s pension trustees, according to the Financial Times.

These ‘multiple roles’ don’t look great, the FT says tonight:

The head of a rival accounting firm, who requested anonymity, added that PwC’s appointment “simply looks wrong”.

“From a professional point of view they might just be the right side of the line [in terms of managing conflicts], but optically they will be on a hiding for nothing.

Even if they are OK, they are not OK,” he said. PwC, which is expected by other executives to earn as much as £50m from the liquidation process, declined to comment.

On the other hand.... the government could hardly appoint KPMG or Deloitte, as they have both acted as Carillion’s auditors, while EY had also advised Carillion.

That only leaves smaller firms, who might have less expertise or experience of such as massive job.

The problem - as with the outsourcing sector - is that there are too few rivals, and thus less genuine choice.

Conservative MP Bernard Jenkin agrees that lessons need to be learned from the Carillion crisis.

Jenkin chairs the Public Accounts Committee, which announced an inquiry into the outsourcing of public services yesterday.

Speaking on Channel 4 News, Jenkin says the government should “expand the pool of companies” which it awards contracts too.

The governments “preferred bidder system” makes the assumption, perhaps wrongly, that bigger companies are safer than smaller ones - Jenkin adds.

Carillion’s collapse means the company’s workers and pensioners will soon be in the hands of the UK’s pension’s lifeboat.

The Pension Protection Fund is widely expected to take on Carillion’s pensions deficit, of around £580m. Those already taking pensions will be protected, but those members below retirement age will face cuts of 10-20%.

The PPF has got the resources to cope. But my colleague Rupert Jones reports that its pockets are only so deep....

The former pensions minister Steve Webb told the Guardian that “Carillion would be the biggest-ever hit on the PPF” but that the lifeboat would be able to “comfortably absorb” the Carillion scheme.

Nigel Green, the chief executive of deVere Group, one of Britain’s biggest independent financial adviser firms, said: “UK final salary pension schemes have an enormous deficit black hole, which raises the inevitable question: how many more big hits can the PPF take?”

The Carillion liquidation, he said, “should trigger alarm bells for pension savers across the UK”.

Here are the key quotes from shadow chancellor John McDonnell in parliament earlier today, as he called for “full transparency” into the Carillion crisis.

“When there were loud and clear worrying signs about Carillion, why, instead of intervening, did the Treasury Minister collude in the strategy of drip-feeding more contracts to Carillion to buoy up an obviously failing company?”

“I put it no stronger than this: at this stage, there are real suspicions that the Government was too close to this company and too wedded to its privatisation role.

“We need full transparency on meetings and discussions that took place between Government ministers, civil servants and representatives of Carillion and what warnings were given to ministers and what actions recommended implemented or not.

We now need the Treasury to start playing its proper role and provide an independent assessment of the potential costs and risks facing the taxpayer.”

In response Liz Truss, Chief Secretary to the Treasury, reiterated Theresa May’s view that taxpayers shouldn’t bail Carillion out.

“It would be completely wrong for a company that had got itself in this state to be bailed out by the state and that is what we are not doing.

Truss also accused McDonnell of taking ‘cheap shots’.

“I think that the Government is dealing with this in a responsible and measured way, rather than making cheap political shots at a time when people’s jobs are in question and we are working to sort that out.”

The Federation of Small Businesses is alarmed to hear that Carillion’s creditors might only recover 1% of the money they are owed (as flagged up earlier).

The Evening Standard’s Russell Lynch has the details:

The revelation comes in a High Court witness statement submitted by the interim chief executive, Keith Cochrane, on the company’s liquidation yesterday and seen by the Standard.

Cochrane’s account of the six-month prelude to the company’s demise also delivers a broadside against the firm’s lenders and reveals that private sector clients were refusing to give them new work in contrast with the Government, which awarded them major contracts on the HS2 rail scheme last summer.

Carillion collapsed under the weight of £1.6 billion in debts and a pension deficit of £587 million this week, leaving many suppliers facing ruin. But Cochrane’s statement also refers to an “entity priority analysis” by accountants EY, which had been working with the firm since the summer, on the impact of a potential failure of the bank last month.

“This showed that the insolvency recovery for creditors in the event of a group-wide liquidation would be an average of between 0.8p in the pound and 6.6p in the pound,” he wrote.

The Federation of Small Businesses said: “If these figures are correct, many small businesses will not be able to cope with that kind of impact on their cashflow.”

Shares in UK geotechnical engineering contractor Van Elle have tumbled by almost 8% today, after it told shareholders that it is owed £1.6m by Carillion.

The Carillion crisis has spurred many Guardian readers to write in with your views (as well as many excellent online comments, of course!).

For example, Paul Davies of Goring, Oxfordshire, says ministers must be held to account:

The government has been trumpeting its code that requires large companies to treat their suppliers fairly and pay them on the same terms as the government pays the big companies. Instead it has emerged that Carillion used its suppliers as a bank – refusing to pay them except on 120-day terms, while being paid on 30-day terms by the government.

For the officials and ministers in so many departments to have turned a blind eye to this bullying by Carillion is a disgrace and it is surely time that both officials and ministers in transport, defence, health, education and elsewhere are held accountable for this total failure. If ministers weren’t aware of this, the officials should be subject to disciplinary procedures.

The brevity award goes to Rick Barker of Stocksfield, Northumberland:

“More is not always better. Million, billion, trillion… Carillion.”

Tomorrow’s newspaper includes a selection of the best, which are online here:

Reuters has calculated that Carillion paid out $1bn (£775m) to its shareholders in dividends since the firm was created 19 years ago.

The company has been criticised for its ‘progressive dividend’ policy -- basically boosting returns to investors each year.

Had it paid out less, it could have done more to tackle its pension deficit (£580m), and could have trimmed its net debts, which swelled to £900bn by the time of its collapse.

Labour’s shadow chancellor John McDonnell has blamed “shambolic Tory government and mismanagement by Carillion’s fat-cat bosses for the company’s collapse.

Writing in the Guardian tonight, McDonnell says:

Nothing has come to symbolise the worship of free market solutions – often against all the evidence – more than the persistent belief that key public services would be better provided by profit-seeking companies. As the journalist Robert Peston put it, the collapse of Carillion represents the definitive end of a 25-year love affair with the private provision of public services.

The end of the affair has revealed some unedifying details about some of the participants in it: the apparent reliance by Carillion’s management on “low-balling” bids to win them, then sweating suppliers and workers to squeeze a profit; Chris Grayling’s insistence on awarding Carillion the HS2 contract even after its first profit warning; David Cameron’s decision to appoint Carillion’s chairman, Philip Green, as an adviser on corporate responsibility.

McDonnell also points out that Labour has promised not to sign any new PFI contracts if it wins the next election, adding:

If the Tories won’t wake up to the reality of the changing economic landscape, it’s time they stood aside and let us take over.

Andrew Bounds, the Financial Times North of England correspondent, reports that there was little action at a Carillion site in Salford, Manchester, today:

Here’s a picture of Andy Bradley of Flora-Tec, who was forced to lay off 10 staff because he’s owed £800,000 by Carillion (see this morning’s posts)

I think he’s holding some mulch. Manure might be more appropriate, given the situation facing hundreds of Carillion’s own suppliers.

The agency Scottish Enterprise is setting up a hotline to help any Scottish companies affected by the collapse of Carillion, particularly on the £1.5bn project to build the Aberdeen bypass.

Keith Brown, the Scottish economy secretary, outlined the measures to MSPs this afternoon.

Answering an emergency question at Holyrood, Brown said the 36-mile long Aberdeen Western Peripheral Route (AWPR) should continue without significant disruption as the two other firms in the consortium, Galliford Try and Balfour Beattie, were contractually obliged to keep the working going.

• The hotline number is 0300 013 3385.
  
• Businesses can also register their details at https://www.scottish-enterprise.com/help/contact-us
  

However, details about the impact on the AWPR’s delivery date, on contractors and employees, or on other Scottish businesses affected by Carillion’s collapse, remain sketchy. Galliford Try and Balfour Beattie estimate it will cost them an extra £60-£80m to over Carillion’s withdrawal from the AWPR project.

Carillion also has facilities management contracts with Scottish public sector bodies, and is working for Network Rail and the Ministry of Defence in Scotland. The Scottish Builders Federation and Federation of Small Businesses have urged their members to come forward if problems emerge. Brown told Jackie Baillie, of Scottish Labour, some contracts may need to be taken over the public sector.

The firms building the AWPR, a PFI-style scheme with a construction price of about £550m at 2012 prices but a total contract cost of £1.47bn, have already admitted it is far more costly than expected. Galliford Try said in September it had lost £89m on two fixed-price Scottish projects: the AWPR and the new Queensferry bridge over the Firth of Forth, and would no longer bid for fixed price public contracts.

Patrick Harvie, the Scottish Green party co-leader, urged Audit Scotland, the public spending watchdog, to include Carillion’s collapse into its investigation into Scottish government PFI projects. The Audit Scotland inquiry was launched after the Guardian disclosed ministers had lost £450m in public borrowing on the AWPR because it breached strict European rules on how PFI projects are included in government accounts.

Liberal Democrat leader Sir Vince Cable has welcomed the government’s decision to fast-track the investigation of Carillion’s current and former directors.

But, like John McDonnell earlier, he also wants ministers to answer questions about their actions.

“We also need a National Audit Office probe, followed by parliamentary scrutiny by the Public Accounts Committee to fully understand what led to Carillion’s collapse.

“We need to know why the Government felt it was not wrong to feed Carillion lucrative public sector contracts when they knew the company was in severe trouble because of its profit warnings.”

ITV’s Joel Hills has more details of the Carillion witness statement, and it’s very bad news for creditors:

Those creditors will include big banks, and also small firms who were contracted by Carillion such as Flora-tec which is already sacking staff.

Nationwide Building Society has agreed to pay around 250 Carillion employees who work its data centres and head office until the end of this month.

However, the future of up to 1,500 workers who clean its national branch network hangs in the balance, as the government is only protecting private-sector contract workers until Wednesday.

Tim Poil, general secretary of the Nationwide Group Staff Union, which directly represents 250 Carillion employees, said:

“We have been negotiating with Nationwide since the end of last week.

Nationwide has said to the Carillion employees on the Nationwide contract - about 250 in total - that they will ensure they will be paid to the end of the month.”

The 250 staff are understood to be maintenance engineers in the data centres, who were transferred from Nationwide to Carillion in 2008, plus reception and security staff at the society’s Swindon headquarters.

Carillion is also responsible for the cleaning of Nationwide’s 650 branches around the country - but had itself outsourced the work to other companies. The number of cleaners could be as high as 1,200 to 1,500, said Poil.

“My understanding is that Nationwide has been in touch with the company to ensure the branches do get cleaned,” said Poil, but their future contractual arrangements remain very unclear.

A major problem for private sector employers that outsourced to Carillion, said Poil, is that the company is officially neither in adminstration or insolvency. If Pricewaterhouse Coopers sells the service contracts to another outsourcing company, then the unions expect employees to be transferred (or Tupe’d) over to the new employer with existing terms and conditions.

But if Carillion is declared insolvent, then employers will have to decide whether to take employees back in house or hurriedly obtain a new outsourcing company to do the work.

Poil says:

“My question to Nationwide is, should you really be outsourcing these sorts of services? It might have looked good at first, but it has fallen apart. If they say to us again they want to outsource some work currently done in house, we’ll be saying, Carillion? Are you sure?”

An official spokesperson for Nationwide said the society hopes to issue a formal statement later today.

The FT reports that Carillion had reached a perilous financial position by the time it fell into liquidation on Monday morning.

Their reporter, Gill Plimmer, explains writes:

Carillion was left with just £29m in cash when it collapsed, according to a document that reveals the extent of the construction company’s financial black hole.

Papers seen by the Financial Times show the insolvent construction company owed £1.29bn to its banks, including a £790m revolving credit facility and £349m in private placement notes.

The papers also show that two firms were unwilling to become administrators, as they feared they might not get paid.....

Newsflash: America’s stock market has hit a new alltime high, as the bull market continues.

The Dow Jones index jumped by 0.86%, or 223 points, to 26,027. This is the first time it has ever burst over the 26k mark. The S&P 500 and the Nasdaw are also at new peaks.

Now, the Dow isn’t a great measure of the US economy (or even the wider stock market, really). And this is just an arbitrary number. But, the speed at which shares are rising is remarkable - it’s less than two weeks since the Dow burst through 25,000.

Sky News is reporting that Carillion’s interim chief executive, Keith Cochrane, has accused Royal Bank of Scotland of undermining efforts to keep it afloat.

Cochrane apparently criticised banks, including RBS, in a witness statement filed at the High Court

Sky’s Mark Kleinman reports:

According to Mr Cochrane’s witness statement, RBS informed Carillion last Thursday that it wanted the company to pre-fund supplier payments made through the bank, which meant it would need to make those payments two days earlier than cashflow forecasts had assumed.

He said this negatively impacted Carillion’s liquidity by between £2m and £20m.

RBS, he added, insisted that this revised arrangement “would be in place until support from [the Government] had been agreed and that the terms of this support would determine whether other uncommitted facilities with RBS would be withdrawn”.

Having been bailed out in 2008, RBS is still majority-owned by the taxpayer -- who of course is now on the hook for potential costs at Carillion.

The UK division of Spanish bank Santanter has also been blamed, for making changes to Carillion’s ‘Early Payment Facility’ - used to make payments to suppliers.

Cochrane says:

“The company relied upon that EPF in order to assist it making payments to its suppliers.

“Santander informed the group’s suppliers that arrangements to automatically prepay invoices submitted by the supplier would be terminated and it sent a separate email to certain of its suppliers that ‘all payments with Carillion are stopped’.

City AM’s Cat Neilan has tweeted Greg Clark’s letters, which ratchet up the pressure on Carillion’s management, and its auditors at KPMG.

Nicky Morgan MP asks Philip Hammond how the government will help small firms who are struggling to pay wages and their tax liabilities.

Hammond says HMRC already has a scheme to help firms who have problems pay their tax bills. Ministers have agreed that HMRC should ‘signpost it’ on the government’s Carillion information websites.

Shadow chancellor John McDonell warns the government that thousands of Carillion employees will turn up to work tomorrow, not knowing if they have a job.

Workers in the supply chain also face an uncertain future, McDonell adds.

He asks how many PFI contracts were signed off by the Treasury under Philip Hammond, and what will happen to the people who work on them.

And why did ministers “collude in the strategy of drip-feeding more contracts” to “buoy up an obviously failing company”?

Chief secretary to the Treasury, Liz Truss, says the government’s priority is to keep supplying public services and support Carillion’s workers. But it would be wrong to prop up a private company that got itself into difficulties.

Over in parliament, chancellor Philip Hammond has been quizzed about the Carillion crisis.

Labour MP Helen Goodman asks about what protection is being provided to the Official Receiver, which took control of Carillion’s operations after it fell into liquidation yesterday.

Hammond confirms that the government has given the Receiver an indemnity, to protect it from any losses. It also has a credit line to cover costs, which can be recovered from government departments in teh future.

Q: What exposure does the government have to Carillion, though loans to the company or support for exports?

Hammond says he isn’t aware of any direct exposure to Carillion, but will check.

The TUC says its proposed Carillion taskforce would have five priorities:

• involve unions to give Carillion workers certainty on their jobs, pay and pensions;
• bring Carillion’s public-sector contracts back in-house to ensure consistent delivery;
• support transfer of private sector contracts to alternative providers with jobs, pay and pensions protected;
• fund a training and financial support package for at-risk workers and apprentices; and
• perform a risk assessment on other large outsourcing firms to avoid another crisis.

The Treasury have created a little video to show how they’re helping Britons cope with inflation:

No mention of the public sector pay cap, though, or the surge in import costs cause by the weak pound....

Aberdeen Standard Investments chief economist Lucy O’Carroll warns that inflation will only fall slowly this year:

“Today’s headline number doesn’t amount to a hill of beans in isolation. But it’s more interesting in the context of what’s been happening with inflation lately. It appears to be steadying around 3%, and could stay close to this level for the next few months.

Looking a little further into 2018, inflation is likely to drift down gradually as the rise in prices caused by the pound’s decline falls out of the numbers.

Ian Kernohan, Economist at Royal London Asset Management, is also hopeful that UK inflation has passed its peak:

“Last month saw CPI inflation fall slightly to 3%. Much of the recent rise in inflation was driven by sterling’s devaluation during 2016.

“However, this factor will begin to fade and inflation should fall back towards the 2% target over the coming year, with Producer Prices figures already showing input price inflation falling sharply.”

But Hannah Maundrell, editor in chief of money.co.uk, remains cautious:

“We can finally breathe a small sigh of relief as inflation has slightly fallen. We’re by no means back to the luxury of low inflation but the fact it hasn’t risen again gives us a slight helping hand.

“We aren’t out of the woods yet though, for many of us prices are still rising faster than wages, so purse strings will still be tight. The cost of everyday items like food and household goods as well as transport continue to push up the cost of living, so budgeting is key.

BBC economics correspondent Andrew Verity has dug into the inflation data, and spotted some big cost increases:

But BlackRock’s Rupert Harrison (a former top Treasury official) hopes that the worst is over:

Fund manager BlackRock, incidentally, is one of the firms who short-sold Carillion’s shares -- the resulting profits mean it isn’t too worried about a cost of living squeeze.....

The pound has dropped by 0.2% following the inflation figures, as City traders calculate that it makes an early interest rate rise less likely.

This has pushed the FTSE 100 index up to 7791 points, a whisker away from a new all-time high.

This drop in inflation shows that the impact of the pound’s sharp tumble after the Brexit vote is now fading.

Nancy Curtin, chief investment officer at Close Brothers Asset Management, explains:

“Consumers will breathe a sigh of relief that escalating living costs are showing signs of abating. The Brexit vote brought with it the side effect of depreciating sterling, and the subsequent rise in import costs, pushing inflation well beyond the Bank of England’s target.

These effects are dissipating somewhat, and core inflation remains lower still.

But she also warns that real wage growth “remains elusive”, so household budgets will remain tight until earnings accelerate.

Britain’s financial ‘pinch’ seems to be easing, says Richard Lim, chief executive of Retail Economics:

“The good news is that inflation appears to have peaked. We expect inflation to fall fairly sharply, to around 2.5% by Spring, which will ease the pressure on household budgets.

“That said, food inflation remains near four-year high and petrol prices rose sharply as the continued impact of Brexit and rising commodity prices fed through supply chains.

This is from James Tucker of the Office for National Statistics:

The UK government will be relieved to see Britain’s inflation rate fall, says Dennis de Jong, managing director at UFX.com:

“Amidst the negative headlines around the collapse of Carillion, there is some more positive news for Prime Minister Theresa May this morning, as December’s inflation figure has eased slightly from its six-year high in November.

“With inflation dropping, and sterling back to its highest level since the Brexit referendum, there is a growing feeling of optimism around the British economy at the moment, with many predicting inflation will fall closer to the Bank of England’s 2% target in 2018.

“However, with wage growth lagging well behind, it will be a long time before this positive news translates into people having more money in their pockets.”

This chart shows how inflation (in yellow) has finally started falling for the first time in six months.

Economics professor Mariana Mazzucato says Carillion’s collapse should trigger a fundamental rethink about how public services are supplied, and paid for:

Julia Palmer, a partner at Begbies Traynor, says small companies who supplied Carillion face little prospect of being paid.

Palmer told Wake Up To Money:

There’s an order of priority. Secured creditiors will be paid first, ahead of unsecured creditors, of whom there will be be a very large number.

Many sub-contractors will be reeling, wondering how on earth they recover from this.

Top UK government ministers are expected to discuss Carillion’s collapse later today, when Theresa May’s cabinet meet at Downing Street.

Last night, ministers held a meeting on the crisis. Afterwards, Cabinet Office minister David Lidington claimed efforts to deal with the crisis had “gone pretty well”.

Lidington added:

“The message today was that day one had gone pretty well, people were turning up to work, we had not had reports of any serious disruption to service delivery.”