More on Carillion from Rachel Reeves MP, chair of the business committee:

Back with Ben Broadbent and his “poor choice of language” earlier, and here is a Guardian Pass notes for him to enjoy:

Italy could cast a dark cloud over markets, says Chris Beauchamp, chief market analyst at IG:

Italy should give investors pause for breath, although at present it is not quite having any real impact, since the likely coalition government seems set on upending the existing eurozone order. How far they plan to go remains a question that is yet to be solved, but it brings back uncomfortable memories of the eurozone crises of years past. Then, it was always said that the single currency union could survive the departure of Greece or Portugal, but that Italy would be the proverbial straw that broke the camel’s back. Italian assets are diverging from their eurozone brethren today, but if things get worse and these plans move closer to reality then we can expect the contagion to spread.

Oil prices have recovered from their worst levels of the day after a bigger than expected fall in US crude stocks.

They dropped by 1.4m barrels last week compared to a forecast of a 0.8m barrel dip. Petrol demand over the past four weeks was up 0.7% compared to a year ago.

Oil prices had fallen back before the news, with some profit-taking after their recent rises following Donald Trump pulling the US out of the nuclear deal with Iran, which potentially curtails supplies from that country.

But the bigger than expected demand for crude last week has seen Brent, which hit a low of $77.61 a barrel today, recover to be virtually flat at $78.42.

More on Italy, and it seems there may not be a move to ask the ECB to cancel €250bn in Italian bonds:

But, the Economist Intelligence Unit says:

The UK Treasury is pumping an extra £4m into the Office for National Statistics - which has been under fire in recent years for the quality of its data - to “capture what is happening in the modern economy.”

It brings investment in the ONS to £16m so far, and will allow it to improve its measurement of inflation, the labour market and the service sector, as well as setting up new PhDs and apprenticeships.

After a series of errors and criticisms of the standard of statistics, the government asked Sir Charles Bean to review the quality of the UK’s economic data. The new funding is part of the response to Bean’s review, although errors continue to be made including a miscalculation towards the end of last year of the growth in unit labour costs.

Meanwhile the continuing political uncertainty in Italy has sent the euro lower and the country’s stock market down 2%. Fawad Razaqzada, market analyst at Forex.com, said:

Reports that the Five Star Movement and the League, which are in talks to form a coalition government, are considering a debt relief from ECB to the tune of €250 billion has stoked fears over Italy’s creditworthiness. Italy’s FTSE MIB has fallen sharply as a result, as too has the euro, and despite an otherwise bullish day for European stocks.

Back to the news that the East Coast mainline will be temporarily nationalised after co-owners Virgin and Stagecoach could no longer meet promised payments. Analyst Joe Spooner at Jefferies says:

Reversion of East Coast to government operation will no doubt spark a cycle of press commentary about rail nationalisation and the political climate will no doubt fuel a public debate.

The more sober reality, we think, is that East Coast was a contract that commercially failed (it was [with hindsight] overbid for - but that’s different to operational failure), Stagecoach has paid the price for that (funded its c.£180m share of the contingent liabilities) and failure has to be an accepted risk if contracts are to be bid for.

The template of allowing the financial consequences of failing franchises to unfold has been reaffirmed for any other that gets into trouble (we retain concerns for the strong growth assumptions with which both TPE and SWR were won at FirstGroup). The political conversation that follows may once again also shape the profile of future franchises put out to tender.

Here is our full report on the move:

The CBI have accused the MPs who drew up the Carillion report of going over the top.

Josh Hardie, CBI deputy director-general, claims the language in the report creates the “wholly inaccurate” impression that Britain’s businesses are all greedy and reckless.

Hardie argues that the other apples in the outsourcing barrel aren’t rotten too.

“Carillion was a painful lesson for business and government on the dangers of short-termism in public service contracts. This failure should act as a catalyst for a level-headed discussion about how the public and private sectors work together to deliver value to society, as they so often do.

“200,000 organisations play a vital role in delivering public services, providing much-needed innovation and investment - whether through building new classrooms or transforming frontline public services - often in very challenging circumstances.

“Knee-jerk soundbites on Carillon risk locking out innovation and investment at a time when it’s needed most.”

It’s true that the report doesn’t pull any punches, with Frank Field MP accusing Carillion’s directors of stuffing their mouths with gold rather than running the company properly.

Getting back to Carillion...... smaller construction firms are welcoming today’s parliamentary report into the company’s collapse.

The Specialist Engineering Contractors’ (SEC) group, which represents engineering groups, says Carillion was not along in abusing its suppliers.

The SEC’s CEO, professor Rudi Klein, says:

“Unfortunately Carillion is not alone. Payment and contractual abuse is rife in the construction industry.”

SEC Group have drawn up a four-point plan to protect small suppliers, and prevent another Carillion:

• All public sector projects should use project bank accounts so that everybody is paid within short timescales from the same “pot”.
  
• The Public Contracts Regulations 2015 should be amended to mandate 30 day payments on all public sector contracts and sub-contracts. Suppliers failing to pay within these timescales must be excluded from public sector works.
  
• Retention monies should be ring-fenced in a protected scheme.
  
  
• The Small Business Commissioner should have the power to fine large companies for poor treatment of their supply chains.

Our financial editor, Nils Pratley, agrees that Ben Broadbent has blown his chance of succeeding Mark Carney:

The chancellor’s job of choosing the next governor of the Bank of England just got slightly easier. A basic requirement of being the nation’s senior central banker is an ability to avoid making crassly sexist remarks. Ben Broadbent, one of four deputy governors and thus an internal candidate for the big job, has just failed the test after describing the UK economy as “menopausal”.

More here:

Here’s some reaction to the news that the Conservative government is bucking its traditional opposition to nationalisation.....

Newsflash: Britain’s East Coast main line, which run between London and Edinburgh, is being nationalised again.

The government has decided to terminate the existing East Coast rail franchise operated by Stagecoach and Virgin Trains, and take it back into public control.

The government is announcing it now, but Stagecoach have already jumped the gun by issuing a statement to the City.

Ben Broadbent’s comments may cloud his future at the Bank of England, says Bloomberg’s Jill Ward.

She writes:

Bank of England Deputy Governor Ben Broadbent was forced to apologize after describing the U.K. economy as “menopausal,” putting the central bank in a new communications controversy.

The remarks in an interview with the Daily Telegraph sparked complaints about sexism and ageism. The timing was particularly unfortunate for the BOE, coming two days after Governor Mark Carney hosted a conference on diversity in central banking. They follow a slew of criticism over the bank’s messaging on monetary policy, which dominated Carney’s interest-rate press conference last week.

Lauren Chiren, a menopausal coach, has written to Ben Broadbent - explaining why describing the UK economy as menopausal is a problem.

Chiren says:

This is another example of gender power and ignorance, and placing blame on women for something that they have no control over. It is appalling, that in 2018, women’s issues are still being used as metaphors, and scapegoats, to avoid actually addressing the underlying issues that are really causing slumps in the economy.

She has also invited Broadbent to a coaching session, to learn more about menopause, and “the power and wisdom” that menopausal women provide in the workplace and beyond.

Jayne-Anne Gadhia, the CEO of Virgin Money who led a government review into gender equality in the financial sector, offer some personal insight into the issue:

“When I read this I thought about my own menopause and was sure he meant that the future is hard work, challenging, renewing, worth fighting for, 100% positive and constantly HOT!”

Several politicians have also tweeted their criticism of deputy governor Ben Broadbent, which rather confirms that he may have sunk his chances of rising to the governorship.

Clare Perry, Britain’s minister for Energy and Clean Growth, says the menopausal comment was out of order:

[andropausal is associated with a drop in testosterone]

Hear hear, say fellow Conservative MP Rachel Maclean, and Labour’s Diana Johnson.

A former Bank of England policymaker, Dame Kate Barker, also believes Ben Broadbent’s comments are out of line.

Barker served on the Bank’s monetary policy committee from 2001 to 2010.

Although Broadbent’s apology was swift, it hasn’t stopped the backlash.

Fran Boait of the Positive Money campaign group isn’t impressed:

Here’s classics professor Barbara Graziosi:

The head of the CBI, Carolyn Fairbairn, has also criticised Ben Broadbent’s comments.

Fairbairn says:

“This poor choice of words is very disappointing and distracts from the real issue at hand.

Productivity has been the UK’s Achilles heel for far too long. Our priority should be tackling the low productivity that can lead to higher regional inequality.

Solving this will help build a stronger economy that raises living standards and wages for everyone.”

Broadbent’s gaffe has reduced his chances of succeeding Mark Carney at the top of the Bank of England, says the FT’s Chris Giles:

Carney is due to leave the BoE next summer, so the formal search for his successor will begin soon.

Describing the UK economy as ‘menopausal’ will be a black mark on Broadbent’s CV.

Giles says:

Ben Broadbent undermined his chances of becoming governor of the Bank of England on Wednesday after having to apologise for describing the UK economy as “ menopausal ”....

The embarrassment felt in Threadneedle Street for using gender-loaded language is all the more acute because the bank has been trying to extinguish such terms from daily use within the institution.

The body which governs Britain’s auditors has announced that it is making ‘good progress’ in its probe into Carillion.

Britain’s Financial Reporting Council is examining Carillion’s financial statements and audits over several years, to decide whether any disciplinary action is needed.

The FRC say:

Given the clear public interest in this matter, the Financial Reporting Council (FRC) is providing an update on its investigation into Carillion. The main areas of focus for the investigations of KPMG’s audit of Carillion (2014 – 2017) and of two finance directors Richard Adam and Zafar Khan are: contract accounting; reverse factoring; pensions; goodwill and going concern.

Good progress with the investigation is being made by the FRC’s team of lawyers and forensic accountants.

That will be cold comfort for the 2,000 Carillion workers who have lost their jobs, and the tens of thousands whose pensions will be hit by its collapse.

And let’s not forget that the FRC is criticised in today’s parliamentary report, for being too supine.

As the MPs put it:

Chronically passive, they do not seek to influence corporate decision-making with the realistic threat of intervention. Action is part of their brief. They require cultural change as well.

We’ve gathered some of the best quotes from the report:

Former Carillion finance director Richard Adam isn’t best pleased with the MPs’ report.

Adam, who was FD between 2007 and 2016, says:

Despite retiring over a year before Carillion went into insolvency, I am deeply saddened by the events that have since overtaken the company.

The reasons for the collapse are clearly complex, however, I reject the unwarranted conclusions the Committees have reached concerning my role at the company.

I have objected to the Committees about quotes that they have misattributed to me. I look forward to contributing to the due process and conclusion of the various investigations that are still ongoing.’

Adam is referring to board minutes showing that Carillion’s pension trustees thought that he saw pension payments as a “waste of money” . Adam says there is no evidence he actually thought this.

You can read the full report here.

The MPs are especially critical of three top directors who steered Carillion towards its demise.

As the report puts it:

“The problems that caused the collapse of Carillion were long in the making, as too was the rotten corporate culture that allowed them to occur”.

Former chairman Philip Green, CEO Richard Howson and finance director Richard Adam get particular treatment.

• Richard Adam was Carillion’s Finance Director for 10 years. He was the architect of Carillion’s aggressive accounting policies and resolutely refused to make adequate contributions to the company’s pension schemes, which he considered a “waste of money”. His voluntary departure at the end of 2016 and subsequent sale of all his shares were the actions of a man who knew where the company was heading.
  
• Richard Howson, Chief Executive from 2012 to 2017, was the figurehead for a business that careered progressively out of control under his misguidedly self-assured leadership.
  
• Philip Green joined the board in 2011 and became Chairman in 2014. He was an unquestioning optimist when his role was to challenge. Remarkably, to the end he thought he was the man to head a “new leadership team”.