Finally, some 16 hours after Carillion went into liquidation, here are the other front pages:

That’s all for tonight. Good night! GW

The Times says taxpayers could be on the hook for significant losses:

Tuesday’s Guardian also leads on Carillion:

Here’s tomorrow’s FT:

The Daily Mail is focused on the news the Official Receiver will probe Carillion’s bosses pay.

It has singled out several examples of ‘fat cat’ remunerations, including:

Richard Howson, who headed the company from 2012 until July 2017, pocketed £1.5 million in 2016 - including a £122,612 cash bonus and £231,000 in pension contributions.

As part of his departure deal, Carillion agreed to continue paying him a £660,000 salary and £28,000 in benefits until October - even though he left the company for good last autumn after a brief spell as an adviser.

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

And Interim chief executive Keith Cochrane will be paid his £750,000 salary until July, despite leaving the company in February. He was not at the company when the rules governing bonuses were relaxed.

More here.

The Daily Telegraph is reporting that Carillion owes around £1bn to around 30,000 UK firms, which would put “thousands of jobs and pensions at risk”. More here.

Jeremy Corbyn’s punchy attack on Public Finance Initiative contracts will intensify the pressure on government ministers to get a firm grip on the Carillion situation.

Especially as thousands of smaller companies are still grappling with the consequences of the biggest, and most disruptive, UK corporate failure in years.

The Financial Times says that recriminations are already flying, as experts predict serious repercussions:

“The fallout from this could be horrendous,” said Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group.

“The domino reverberations as it travels down the supply chain could be unprecedented.”

There are alarming signs tonight that some Carillion contractors may already be cutting staff.

My colleague Simon Goodley explains:

A worker on the new Midland Metropolitan hospital building told the BBC: “Everyone on the site got told: ‘That’s it, go home’. My company said, ‘You’ve been laid off’.”

“They’ve literally locked the gate. They’ve told us we can get our personal tools off the site if they’re small, but that’s it.”

More here:

Over in the House of Lords, a former Conservative chancellor has backed calls for an inquiry into Private Finance Initiative (PFI) contracts in the aftermath of Carillion’s demise.

Lord Lawson told fellow peers he “refused to have anything to do with it [PFI]” when in office in the 1980s even though Treasury officials were keen on it.

PA has more details:

Subsequent chancellors, especially Labour’s Gordon Brown, were “enthusiastically in favour of it”, Lawson continued, because it enabled ministers in the short term to “dress up” considerable amounts of public expenditure off the public sector balance sheet.

He said this was not a good reason for something which did not give good value for money for the taxpayer and introduced “a degree of moral hazard which we see very much in the Carillion affair”.

Lord Lawson said it was important to “take stock and decide whether the whole PFI initiative should be proceeded with any further” because there was enough evidence to show it was not good value for money or sensible for the taxpayer.

Education minister Nick Gibb is also attending the ministerial meeting - understandably, as Carillion provides services, such as meals, to 230 schools.

We’re expecting to hear details of the meeting later this evening.

Over in Whitehall, government ministers are discussing the Carillion crisis at the Cabinet Office.

Chancellor Philip Hammond is there. As he arrived, journalists asked whether taxpayers could suffer losses from the company’s collapse, but he didn’t answer.

The Press Association focuses on the news that Carillion’s top executives are being investigated over their conduct (as covered earlier in this blog)....

Here’s a flavour:

CARILLION BOSSES TO BE INVESTIGATED OVER COMPANY’S COLLAPSE

Top bosses at Carillion are to be investigated after the construction firm’s collapse put thousands of jobs at risk and saw the Government heavily criticised for its role in the debacle.

A last ditch plea from Carillion to the Government to provide it with a 20 million lifeline fell on deaf ears over the weekend, triggering a compulsory liquidation to be overseen by PwC.

Carillion has public sector or public/private partnership contracts worth £1.7bn, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence.

But it has seen its shares price plunge more than 70% in the past six months after issuing a string of profit warnings and breaching its financial covenants.

The group, which employs around 20,000 British workers, has been struggling under £900m of debt and a £587m pension deficit.

David Lidington, the Cabinet Office minister, told Parliament on Monday afternoon that the Official Receiver will now investigate the role of the company’s former and current directors in its collapse, warning they could face “severe penalties”.

Government minister Oliver Dowden has told Channel 4 News that Carillion staff should keep clocking on, despite the huge uncertainty over their future.

Carillion’s lurch into liquidation shows “the consequences of corporate greed”, says the Guardian’s editorial tonight.

Solving this culture requires short-term, and long-term, answers, we say.

The immediate steps are obvious: a full investigation into the liquidation (City regulators have questions too). But Carillion’s failure is much more than that. It is the collapse of an idea that has held for 30 years.

Outsourcing public sector contracts wasn’t just a doctrinaire response to high levels of borrowing. It was also because Whitehall was not very good at it. That makes wholesale renationalisation, not least in a Whitehall stretched to breaking point by Brexit, extremely unlikely. This is a crisis that has been looming for years.

There is no simple fix. But encouraging more, smaller businesses to secure contracts, better corporate behaviour and perhaps a single outsourcing regulator will all be part of an answer.

The Guardian view on Carillion: reaping the consequences of corporate greed

Our financial editor, Nils Pratley, has lambasted Carillion’s management for not doing a more competent job:

Responsibility for Carillion’s collapse lies in the boardroom. It is the job of the directors to manage risk and the eight pages of Carillion’s last annual report devoted to the subject clearly only scratched the surface.

Chairman Philip Green should have spent less time wondering about the long-terms risks from Brexit and more time addressing the upfront and present dangers from cost over-runs on three big jobs: new hospitals in Liverpool and Smethwick plus the Aberdeen bypass.

The walk-on role played the auditors, KPMG, will go under the Financial Reporting Council’s microscope in due course. But the hard fact is that Carillion directors were boasting in March last year of having “substantial liquidity with some £1.5bn of available funding” yet the company ran out of money 10 months later.

That suggests delusion in the boardroom on a grand scale. Hedge funds, looking from outside and betting on the shares going south, seem to have had a better grasp of Carillion’s financial distress than the insiders....

More here:

This must have been a very rough day for Carillion’s 45,000 workers, including around 20,000 in the UK.

Work has continued at some sites, as these photos show:

I’m afraid I missed Labour MP Chi Onwurah’s question to David Lidington; fortunately she’s just tweeted a clip:

It’s official: Carillion haven’t cut any staff today.

Carillion is the most ‘appalling epitome of lemon socialism’, says Labour’s Paul Sweeney, as a failing company is being propped up.

Lidington firmly denies it, saying that Carillion’s creditors and shareholders have suffered financial losses.

Matt Western, Labour MP, says that Carillion was the most shorted stock on the London stock market in 2016 (meaning hedge funds were betting against it).

Why didn’t the government take notice? Was there a blind spot?

Lidington denies that the government was blind to Carillion’s challenges. That’s why they created joint ventures, so that other private sector companies would step in if Carillion failed.

Here’s a clip of Rachel Reeves’ question:

Diana Johnson MP says the ‘reward for failure’ at Carillion show that the government should crack down on executive pay.

David Lidington reiterates that the Official Receiver can take action against any directors who have acted unacceptably.

Labour MP Toby Perkins asks why the government allowed its ‘crown representative’ at Carillion to lapse this summer [as revealed earlier], just as the company filed its first profits warning.

Lidington says a new Crown Representative has been appointed, and will be named soon (isn’t it a bit late now?!).

Labour’s Kate Green asks if Carillion has been hit with penalties over its poor management of the prison service contract? (all those broken windows at Wandsworth....)

Lidington says he’ll ask the Justice department.

Labour’s Stephen Kinnock says Carillion is a ‘sorry tale of the privatisation of profit and the nationalisation of risk’.

Q: Isn’t the case for a windfall tax on these companies now unanswerable?

David Lidington denies this; Carillion isn’t being bailed out, and the risk remains with the private sector.

Conservative MP Robert Coutts asks the government to guarantee that Oxford’s John Radcliffe hospital* won’t be hurt by Carillion’s collapse [Carillion has provided services at the JR since 2005]

Lidington says there is not sign that the JR has been affected by Carillion’s problems.

Lidington denies that he is just providing a helpline - we are also guaranteeing that public sector contracts will continue.

Lidington denies that Carillion’s demise reflects badly on the UK, saying that “there are few countries where companies don’t fail”.

Carillion’s collapse is a welcome reminder that “Capitalism without bankruptcy is like Christianity without hell,” says Conservative MP Andrew Bridgen.

“Without it - there’s nothing to keep us on the straight and narrow.”

Lidington won’t be lured into a theological debate, but agrees that the work contracted to Carillion should continue.

Does the government’s protection of Carillion’s public sector contracts include new commitments, or might early-stage projects be ditched, asks Labour’s Louise Haigh.

Lidington says the Official Receiver, and government departments, must examine each contract to see how to take them best forward.

Kevan Jones MP asks about Carillion’s habit of not paying suppliers for several weeks (120 days in some cases, apparently)

Q: What will the government do to help them?

Lidington says suppliers who have not been paid now become official creditors. And he suggests that the government will not bail out these companies -- taxpayers’ money should be used to protect public services.

How many profit warnings does a company have to issue before this government decides not to hand it any more business, asks Liberal Democrat MP Stephen Lloyd.

Lidington replies that profit warnings happen from time to time; shunning a company on this basis would only push it into deeper problems.

Conservative MP Kevin Foster asks what protections are being provided for Carillion pensioners.

Cabinet Office minister David Lidington says the Official Receiver must examine 12 separate pension funds. But the bottom line is that all existing pensioners will be protected.

Labour’s Liz McInnes asks if the Carillion crisis will exacerbate the NHS’s winter crisis.

Lidington says (again) that contingency plans are in place to protect health services.

Conservative MP Bob Neill asks how Carillion’s prison contracts will keep operating.

Lidington says the government has contingency plans - a new government company could be created to take over this work.

Sam Coates of The Times is stuck by the government’s warning that Carillion’s private sector contracts could be terminated on Wednesday, unless customers commit to keep paying up.

Former infrastructure tsar Lord Adonis isn’t impressed by Lidington’s comments:

This is from The Sun’s Steve Hawkes:

Labour’s Stella Creasy says Carillion has made nearly £1bn profit on PFI contracts over the last four years.

Will the government now bring in a windfall tax on PFI profits?

Cabinet Office minister David Lidington replies that PFI has provided £60bn of capital to improve public services.

PFI is not an ‘easy ticket for riches’ for contractors, he insists. In this case, the shareholders and creditors of Carillion are suffering very significant losses.

Labour’s Hilary Benn asks David Lidington to confirm that all payments made to Carillion under PFI contracts from councils will now cease, and that the Official Receiver will not be allowed to sell these contracts on.

Lidington says he isn’t aware of any PFI contracts facing an immediate crisis; but the future of all Carillion contracts depends on finding fresh suppliers to take them on.

Conservative MP Sir Desmond Swayne asks whether government officials are capable of spotting when a company is pitching its services too cheaply.

Lidington says there should be a ‘fresh look’ into how the government handles such issues.

Labour’s Rachel Reeves points out that Carillion kept paying dividends to shareholders, even as it ran up £900m of debts and a £580m pensions black hole.

And it is still paying £600,000 to its ex-CEO (Richard Howson)

Q: Can you confirm that those payments to Carillion’s CEO end today?

Lidington repeats that the Official Receiver will examine whether directors have acted properly (which I think means that Howson’s payments continue for the moment...)

Echoing Bill Cash’s comments, Conservative MP Dame Cheryl Gillan says that Carillion’s demise is a great opportunity to cancel HS2.

Lidington reiterates that Carillion’s liquidation doesn’t affect the construction of HS2.

Labour MP Emma Reynolds asks Lidington about the revelation that Carillion changed its bonus rules, to make it harder to claw money back from bosses.

Lidington says he mustn’t pre-empt the Official Receiver’s probe into the conduct of past and present directors. But he emphasises that the Receiver can impose ‘severe’ penalties if there has been misconduct.

Tory MP Bill Cash asks about the impact on High-Speed Two .

Does Carillion’s collapse affect the viability of the project?

Lidington says HS2 will continue as planned, as the two other private sector parties will take over Carillion’s responsibilities (that’s Kier, and French civil engineering group Eiffage).

Labour MP Eleanor Smith says the liquidation of Carillion hit workers like a bomb today (the company’s HQ is in her Wolverhampton constituency).

What support will the government provide? What future can ministers provide?

Lidington agrees to meet with her to discuss what support can be provided to the company’s staff.

Conservative MP Iain Duncan-Smith congratulates David Lidington on his ‘swift action’ over Carillion.

He says Labour drove the move towards outsourcing public services (during the Blair-Brown years).

Lidington replies that his immediate priority is focusing on the continuity of public services, but eventually ministers should look at the wider issue of outsourcing.

The SNP’s Tommy Sheppard asks what will happen to Carillion’s contracts in Scotland.

He also asks what due diligence was carried out by the government, given it handed Carillion £2bn of contracts in recent months.

Q: Was it incompetence or ideology that led to ministers signing off multi-million pound contracts to a company that was going bust?

David Lidington assures Sheppard that the government will continue to pay the salaries and bills owed by Carillion in Scotland, as in the rest of the UK.

Some contracts will be transferred to other suppliers, he suggests, while others could be taken in-house by the government.

David Lidington says that Carillion only held contracts with 230 UK schools.

He confirms that 60% of Carillion’s revenue comes from private sector contracts. There is currently a 48-hour ‘grace period’ while customers decide whether to maintain those contracts or look elsewhere.

Workers on the 40% of public sector accounts will continue to be paid by the Official Receiver, Lidington confirms.

Lidington also takes a swipe at Trickett for his argument that Carillion’s contracts should be taken in house.

One third of Carillion’s contracts were awarded by the Conservative government, one third were awarded by the last coalition government (2010-2015) and a third were awarded under the previous Labour government.

Jon Trickett asks David Lidington to reassure the House of Commons that Carillion isn’t the first in a series of dominos, and accuses the government of being ‘too cosy’ with Carillion management.

Lidington says that the private sector plays an important role delivering UK public services - something that parties on both sides of the House of Commons have accepted.

Breaking away from parliament, Britain’s prison officers are urging the government to take Carillion’s contract for prison maintenance back into public hands.

Steve Gillan, general secretary of the POA trade union, says facilities have deteriorated on Carillion’s watch.

We need to know the contingency plans to keep our prisons operational. During the time Carillion had this contract the level of essential maintenance and work that is outstanding has spiraled out of control.

This has resulted in loss of prison accommodation and in-humane conditions in our prisons.

My colleague Amelia Gentleman warned last year that Wandsworth prison wasn’t keeping up to speed with repairs:

Britain’s top civil servant, cabinet secretary Sir Jeremy Heywood, admits that Carillion has gone badly wrong.

John Manzoni tells the PAC committee that he hopes that “most” of the jobs and pensions at Carillion will be preserved.

That’s effectively an admission that some won’t be....

The Public Accounts Committee is uncovering some intriguing detail into the Carillion breakdown, as it quizzes Cabinet Office head honcho John Manzoni.

Manzoni has revealed that the government’s Crown Representative ‘rotated off’ the Carillion account this summer - just when the company suffered its first profit warning.

[explanation: a Crown Representative is a senior role, meant to help the government get a good deal from its suppliers]

This meant that “the horsepower” around the Carillion was provided by the strategic partnership management team, who Manzoni insists ‘played a blinding role’.

The committee aren’t impressed; one MP asks whether this meant they had their eyes covered.

No, says Manzoni coldly. The head of this team did a very good job, he insists.

But Manzoni also seems to imply that Carillion’s second profits warning, two months ago, jolted the civil service:

There seems to be some confusion about this crisis meeting....

The Public Accounts Committee is now quizzing the cabinet office’s top civil servants about why Carillion was handed public sector contracts at a time when City hedge funds were betting against the company.

Q: Why can’t the government tell a company like Carillion to ‘take a holiday’ from bidding for government contracts, because they look high risk?

Because it’s against the law, shoots back permanent secretary John Manzoni.

Q: So how can you be mitigaging risks if you are handing Carillion contracts that you don’t want to?

We never award contracts that we don’t want to, Manzoni replies. The government always does a full review of every company involved when we award these bids.

Manzoni describes Carillion’s liquidation as a “very unusual” move, designed to prevent a sudden breakdown in public services.

We have put it to the Official Receiver with an instruction to keep public services running....

The cost of that is no greater than running these contracts in the normal course of business.

But, there will be some additional costs incurred by the Official Receiver, which the taxpayer will pick up.

George Osborne’s attempt to blame the civil service for the Carillion crisis may be backfiring, as photos of the ex-chancellor posing in Carillion-branded hard hats hit the internet.

The serious point is that Osborne had a massive influence on Britain’s finances for several years, and pushed on with PFI contracts after becoming chancellor. This crisis can’t simply be blamed on civil servants; their job is to implement government policy.

Equipment firm Speedy Hire is being pummelled by City traders, sending its shares down by up to 8% today.

Carillion was a major customer for Speedy Hire, which supplies tools to the construction industry.

The collapse of Carillion has also caused alarm in the Republic of Ireland.

Ireland correspondent Henry McDonald reports:

The Irish government has been urged to act swiftly and decisively regarding five schools in Ireland that have been left in limbo over the collapse of Carillion.

Main opposition party Fianna Fail has warned today that the schools are completely unsure as to what will happen their building projects which under the remit of Carillion.

Fianna Fail Education spokesperson Thomas Byrne said one of the schools is in his own Meath East constituency.

“Eureka Secondary School in Kells is due to open in a matter of weeks but as a result of the difficulties at Carillion, there is doubt as to when it might happen, and who will provide the facilities management and catering services in the school.”

Byrne called on the state to take over the running of the non-academic services at all five schools and then possibly tender again for the contracts after Carillion’s collapse.

Update: Cabinet Office minister David Lidington is expected to update MPs on the Carillion crisis at around 4.15pm.

A spokesman for the RMT rail workers union said it was “almost inevitable” that some trains won’t be cleaned today due to the collapse of Carillion.

That’s due to the problems with its fuel cards (see earlier post)

The company employed train cleaners, who were issued with vans to get from job to job and fuel cards to pay for petrol.

With the company in liquidation, those fuel cards have stopped working, making it impossible for cleaning staff to do their jobs unless they are willing to dip into their own pockets.

If your train carriage on the commute home is filthy this evening, that might be why.

Sam O’Callaghan, solicitor in the construction, energy and projects team at Capital Law, predicts that Carillion’s project portfolio will face “significant” difficulties.

Sub-contractors, consultants, and clients may end up losing out on money that they’re contractually entitled to. Secured creditors (like banks) will be putting their hands in the insolvency pot first.

Every sub-contractor, consultant, or anyone involved in a contractual chain with Carillion should take immediate action – starting by reviewing their contract, or getting their lawyer to do so.”

The Press Association is reporting that fuel cards issued to Carillion workers were rejected at petrol stations this morning.

PA says:

Train cleaners have been told to work normally, but their fuel cards are not working, according to the Rail, Maritime and Transport union.

One cleaner filled up at a petrol station, but the Carillion Fuel Card bounced.

The RMT said it was the start of the “brutal reality” facing Carillion workers.

Conrad Landin of the Morning Star has more details:

Frank Field MP, Chair of the Work and Pensions Select Committee, has condemned Carillion for allowing its pension deficit to swell (to at least £580m).

In a statement, Field says tougher rules are needed to prevent firms acting recklessly.

“Carillion took on mega borrowings while its pension deficit ballooned. We called over a year ago for The Pensions Regulator to have mandatory clearance powers for corporate activities like these that put pension schemes at risk, and powers to impose truly deterrent fines that would focus boardroom minds.

“If Government had acted then, the brakes might have been put on Carillion’s massive ramping up of debt and it never would have fallen into this sorry crisis. It seems we have a new case like this every week, and this one is particularly disastrous, with massive job losses and 28,000 current and future pensioners at risk.

I would like to ask the Government today: what more is it going to take?”

Carillion’s collapse is good news for one group -- its rivals.

Shares in outsourcing group Serco have surged by over 5% this morning, as traders predict that it will pick up some juicy contracts in the aftermath of Carillion’s demise.

In the long-term, the loss of Carillion could allow the rest of the sector to push up their prices too.

Connor Campbell of Spreadex says:

Of course there were plenty of vultures in the sector circling the Carillion carrion. Serco Group, which bought £47.7 million in healthcare contracts from the crisis-hit company back in December, jumped 4.5%, while Capita climbed 1% and Interserve rose 2.6%.

As chancellor of the exchequer between 2010 and 2016, George Osborne had a tight grip on the nation’s purse strings.

Now, in his new role as editor of the Evening Standard, Osborne blames the civil service for handing too many contracts to big firms like Carillion.

Today’s Standard editorial explains:

The failure to use a variety of smaller, mid-size companies undermines innovation and leaves services hostage when things go wrong.

Why was Carillion awarded huge contracts by the civil service, with whom rather than ministers almost all procurement decisions lie after they knew it was struggling last year?

Above all, how we will insist — as we must — that shareholders are bailed in before the taxpayer is asked to fund any kind of bailout?

We wait for answers.

Back in December 2014, Osborne took a tour of a Carillion training centre in Middlesborough, where he learned how to lay bricks and hang a door. Perhaps he could offer his services to those local authorities struggling to replace Carillion today....

Peter Kitson, Partner at law firm Russell-Cooke, says Carillion may have caused its own demise by pitching its services at an uncompetitively low rate - to win business.

”The procurement rules (the Public Contracts Regulations) which govern public sector procurement are central to understanding what has happened here. Almost all Carillion contracts have been competitively tendered under those procurement rules.

The rules require public sector clients to investigate and possibly to exclude any tenderer whose bid is ‘abnormally low’. One contributory factor here may be that Carillion has tendered at very low margins, possibly unsustainably low, in order to win these huge volumes of work.

If such bids have succeeded, that can only mean either than the Regulations themselves are ineffective or that public sector clients lack the confidence or the expertise properly to enforce those rules.

Following this morning’s announcement, I am sure that many of those public sector clients will be seeking advice on the extent to which those same procurement rules allow short term emergency replacement contracts to be let without formal procurement.”

The British Army is reassuring military families that Carillion’s collapse won’t hurt them:

Carillion was employed by the government to manage around 50,000 homes used by armed forces personnel and their families.

Carillion’s collapse will have widespread consequences for local authorities and housing associations across the UK.

Andrew Lancaster, partner at Anthony Collins Solicitors, says organisations may face extra costs as they scramble to find new contractors to step in.

While it’s likely some key public sector contracts will be ring-fenced and supported in some way by the government, local authorities and housing associations still need to provide their residents and communities with resilient public services in the coming week. This means back up contractors need to be found immediately, requiring huge amounts of time, resource and additional expenditure.

“I would urge such organisations to read their contracts’ payment and termination clauses and, crucially, to comply with them to avoid any claims from the liquidator later on for any breach

Here’s my colleague Dan Sabbagh, reporting from today’s House of Commons lobby briefing on Carillion:

The prime minister’s official spokesman said that some of Carillion 450 public sector contracts could be taken in house, although that was “a decision for further down the line”.

However, the contracts for building part of the HS2 rail link would remain in the private sector, he added. Kier and Eiffage, the other two construction partners, had given ministers assurances they could take the work to build the London to Birmingham part of the line without Carillion.

He described the collapse of the company as “very regrettable” and said that ministers had been monitoring the situation since the company’s profits warning in July. Only a “single figure” number of contracts had been let to Carillion since then, including those for the HS2 build, and in the case of joint ventures assurances had been sought in all circumstances.

Number 10 added there would be no significant extra costs in servicing contracts held by the collapsed company bar paying for the expenses of the Official Receiver which has taken control of the firm.

There were no plans for an official inquiry into the company’s collapse beyond an already announced investigation to be held by the receiver whose job it is to ‘investigate the cause of failure’.

Lord Adonis - who earlier suggested Carillion could be a British Enron - says the government should consider taking its contracts back into state control.

It may be best value for the government to take over public sector contracts, rather than hand them to other companies who will demand a “King’s Ransom”, Adonis tells Sky News.

That might be an ideological switch for the Conservative government, but Adonis insists that they have a duty to protect the taxpayer.

Carillion’s shocking collapse should trigger a full review of the privatisation of public services in the UK, says Guardian columnist Simon Jenkins:

What the Carillion saga demonstrates is the rampant indiscipline in the contracts themselves. The company’s demise is attributable to favouritism, cost escalation, excessive risk, obscene remuneration and reckless indebtedness. Carillion and its bankers clearly thought it too big to fail. Whitehall behaved accordingly. It was like a pre-2008 bank.

There must now be a review of how privatisation is working. Its so-called parastatal companies are not true private entities. They depend on the state, and the state depends on them. Their lobbyists develop an unholy relationship with ministers and officials – witness the uncontrolled revolving door between Whitehall and the boardrooms.

Lee Causer, partner at accountancy firm Moore Stephens, predicts that Carillion’s failure will have “huge ramifications” across the construction sector.

He expects contracts to be delayed, and some suppliers to go bust.

“Many of Carillion’s suppliers will have automatically assumed that a group the size of Carillion would be rescued. Therefore, many will not have prepared for its collapse and will struggle to get alternative contracts in place.

“The failure of Carillion will inevitably lead to disruption across the supply chain, and financial turmoil for sub-contractors who relied on business from Carillion.

“Its collapse could trigger a number of insolvencies across the construction sector, in an industry that already experiences the highest levels of insolvency per year in the UK.”

Professor John Colley of Warwick Business School says Carillion was sunk by two serious mistakes:

Too many contracts were taken at poor margins and terms, which prevented any subsequent profitability under competitive pressure. Some were allocated during the recession when it was win work at all costs.

“The other key issue is project accounting, which tends to recognise losses late in the project, effectively when the project starts to run out of money. There will no doubt be serious retrospective scrutiny of the accounting.

Sarah Beale, chief executive at the Construction Industry Training Board (CITB), fears that Carillion’s apprentices could soon be out of work.

She is pushing the Official Receiver to support Carillion’s trainees:

“The news of Carillion entering insolvency is clearly a significant blow to the UK construction sector. While this will present the sector with a number of challenges, CITB’s priority is to do all it can to ensure that Carillion apprentices can continue their training so their skills are not lost.

“We have established a project team to work with the apprentices and will be offering in principle grant and apprenticeship transfer incentives to our employer base in order to retain these learners.

Carillion’s army of workers are suffering a ‘terribly time’ today, says UNISON general secretary Dave Prentis.

“Staff need assurances about whether they have a job, who will pay their wages, and what’s going to happen to their pensions.

“The government needs to move quickly to bring these contracts back in-house – to safeguard our services and to protect the many staff in schools, hospitals, local authorities and libraries.

“It’s disgraceful that Carillion was lining the pockets of its shareholders, even though the company’s future was increasingly uncertain.

Prentis also fears that taxpayers will pick up the bill for the company’s failure.

“Crucial public services have been put at risk, and the taxpayer is going to be stuck picking up the bill for yet another failed privatisation experiment.

“Carillion holds key contracts across the health service – with the current winter pressures, staff shortages and underfunding, further uncertainty puts the NHS in a precarious position.”

Last week, my colleague Aditya Chakrabortty warned that the Carillion crisis could have a major impact on the UK:

This is a firm that employs just under 20,000 workers in Britain – and the same again abroad. It has a huge chain of suppliers – and its habit of going in for joint ventures with other construction businesses means that a collapse at Carillion would send shockwaves through the industry and through the government’s public works programme.

To see what this means, take the HS2 rail link, where Carillion this summer was part of a consortium that won a £1.4bn contract to knock tunnels through the Chilterns. If Carillion goes under, what happens to the largest infrastructure project in Europe?

What happens to its partners on the deal, British firm Kier, and France’s Eiffage? The project will need to be put back and the taxpayer will almost certainly have to step in.

The decision to put Carillion into a full-blown compulsory liquidation shows how little value was left within the company.

David Birne, insolvency partner at chartered accountants H W Fisher & Company, says it is ‘extremely rare’ move for a company of Carillion’s size - and bad news for its staff.

Birne warns:

“For Carillion’s 43,000 global staff, liquidation means the immediate risk of redundancy.

“For Carillion it will mean huge breach of contract penalties that could dwarf anything demanded of it by creditors.

“And there will undoubtedly be a knock-on effect for companies that supply Carillion that will go all the way down the supply chain to the smallest firms.

Construction firm Galliford Try has issued a statement.... revealing that it also faces a financial hit from Carillion’s demise.

Galliford says:

The Group is in joint venture with Carillion and Balfour Beatty on the £550m Aberdeen Western Peripheral Route contract. The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract.

Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80 million, of which any shortfall will be funded equally between the joint venture members.

Galliford’s shares are down by almost 4% this morning, at the bottom of the FTSE 250.

Balfour Beatty are down 2.3%, after revealing it faces a hit of £35m to £45m.

Just in: Cabinet Office minister David Lidington will give a statement to the House of Commons later today on the collapse of Carillion.

Simon Underwood, business recovery partner at accountancy firm, Menzies LLP, also fears that small firms employed by Carillion could now collapse.

Underwood expects Carillion’s operations to keep running, probably propped up by government cash (ie, the taxpayer).

But the liquidation could be ‘long and messy’, which could drag small firms under.

Underwood says:

“Carillion’s liquidation will have a significant impact on its many thousands of employees and on the company’s supply chain, which is likely to comprise a large number of UK-based sub-contractors.....

“Given that the company has now gone into liquidation, sub-contractors and suppliers could experience financial difficulties as a direct result of Carillion’s demise; potentially leading to knock-on insolvencies. If affected in this way, suppliers and sub-contractors should seek professional advice immediately.

Underwood adds that small businesses affected have some options:

It may be possible to ease the cashflow burden by helping them to agree ‘Time to Pay’ arrangements with HMRC and possibly renegotiate terms with their own suppliers, either informally, or through a rescue process like a Voluntary Arrangement.”

My colleague Rob Davies is investigating how Britain’s construction industry is responding to Carillion’s collapse....

Former pensions minister Steve Webb is concerned that Carillion has been lavishing its shareholders with dividend payments, rather than tackling its pension deficit.

Infrastructure business Amey Group says it will take over the delivery of housing service for Britain’s military.

Amey had been managing these contracts in a joint venture with Carillion, but is now taking up the job alone.

It says:

Amey has incorporated joint ventures with Carillion to deliver the Regional Prime and National Housing contracts for the Ministry of Defence (MOD), through the Defence Infrastructure Organisation (DIO). These contracts maintain the MOD estate in the UK.

The terms of the joint ventures’ arrangements mean that Amey will continue the services now that Carillion has announced it is entering into immediate compulsory liquidation. Amey is committed to doing this and ensuring continuity of service to the DIO and MOD and the service men and women in the UK.

Labour MP Matthew Pennycook says Amey must ensure that military families don’t suffer from Carillion’s demise.

Carillion’s former CEO could soon be summoned to parliament to explain what went wrong...

Accountancy firm PwC has issued a statement, confirming that the High Court has appointed the Official Receiver as liquidator for Carillion.

Six senior PwC executives will act as ‘special managers’ to assist in the operation.

PwC says staff affected should keep working while the situation unfolds:

The Official Receiver’s priority is to ensure the continuity of public services while securing the best outcome for creditors.

Unless told otherwise, all employees, agents and subcontractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidations.

They also confirm that Carillion’s investors have been wiped out:

Unfortunately, as a result of the liquidation appointments, there is no prospect of any return to shareholders.

The government has set up an advice page on the Carillion crisis:

Carillion declares insolvency: information for employees, creditors and suppliers

Train drivers’ union ASLEF has added its voice to the chorus of calls for a public inquiry.

Mick Whelan, general secretary of ASLEF, says:

‘Naturally, we are thinking of all the workers, in the public and private sectors, who have been impacted by the construction company Carillion going into administration today.

‘We do wonder, though, how and why, after serial profits warnings, contracts came to be awarded to Carillion, particularly in the rail sector by Chris Grayling, and the impact this may have on the future of Crossrail and HS2.

‘We echo the request from Rebecca Long-Bailey to bring all public sector contracts back under public control immediately.

‘And there needs to be an urgent public inquiry into all aspects of this and a recognition that PFI does not work for the taxpayer, the consumer, or the good of this country.’

Carillion’s collapse will affect hundreds of projects and contracts across the UK.

Reuters explains:

Britain’s Carillion collapsed on Monday after its banks lost faith in the construction and services company, throwing hundreds of major projects into doubt and forcing the government to step in to guarantee vital public services.

Carillion was forced into compulsory liquidation after costly contract delays and a slump in new business left it at the mercy of its lenders and battling a ballooning debt pile.

The demise of the 200-year-old business poses a major headache for Theresa May’s government which has employed Carillion to work on 450 projects including the building and maintenance of hospitals prisons, defence sites and the country’s new superfast rail line.....

Carillion has debt and liabilities of £1.5bn pounds with creditors that include banks RBS, Santander UK, HSBC and others. It has a pension deficit, included within that figure, of £580ms.

More here: Britain’s Carillion collapses, forcing government to step in

David Lidington ducked a question about whether a public inquiry should be held into Carillion, as he urged staff to keep working.

But his opposite number, shadow cabinet office minister Jon Trickett MP, insists a ‘serious investigation’ is needed.

Trickett says:

“The Government must act quickly to bring these public sector contracts back in-house to protect public services and ensure employees, supply chain companies, taxpayers and pension fund members are protected.

“Given £2billion worth of Government contracts were awarded in the time three profit warnings were given by Carillion, a serious investigation needs to be launched into the Government’s handling of this matter.

“It is vital that shareholders and creditors are not allowed to walk away with the rewards from profitable contracts while the taxpayer bails out loss-making parts of the business.”

Carillions’s shares have been temporarily suspended from trading on the London stock market.

They have plunged in recent months, taking its value down to around £60m.

Good news for commuters:

Carillion is the second biggest supplier of maintenance services to Network Rail, though, so its collapse is still a significant event.

Financial analyst and journalist Louise Cooper is also struck by the decision to liquidate Carillion:

This is from Sky’s News’s Mark Kleinman:

My colleague Rob Davies, who has been covering the Carillion story, tweets:

Carillion’s collapse will send shivers through the UK economy.

As well as employing around 20,000 people in the UK, the company also uses thousands of smaller companies to help provide its services.

The BBC’s Joe Lynam says these firms must be very nervous...

The decision to liquidate Carillion means the government is effectively taking control of the company, says City expert George Trefgarne.

ITV business editor Joel Hills calls the situation ‘highly unusual’.

Rebecca Long-Bailey MP adds that the government must ‘step in immediately’ to keep Carillion’s operations running.

That will give reassurance to workers that they will be transferred across into potential government institutions that will provide these services.

It will also give comfort to those companies in the supply chain that rely on Carillion.

Carillion’s chairman, Philip Green, says he deeply regrets the decision to put the company into liquidation.

But he insists there was no other option, after the company’s ‘stakeholders’ (ie, its bankers) declined to provide more short-term financial support over the weekend.

Here’s the official statement from Green:

“This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”