Carillion wins again with two more contracts. This needs to end but it will take time

The troubled contractor and its peers are too big to fail

Carillion has won two more contracts (Reuters)

Just a day after its joint venture was handed two of the nine HS2 construction lots, troubled contractor Carillon has scored again with two more Government contracts.

They have been awarded for facilities management at hundreds of military sites in the North of England, Scotland and Northern Ireland. So quite different to building a high speed rail link. You know what they say about jacks of all trades.

To be sure, they're nowhere near the size of the £1.4bn HS2 gigs, but at £158m, they’re still not too shabby and the work is still very important.

As I said yesterday, given Carillon’s troubled financial situation, which saw the chief executive stepping down, the dividend suspended to save cash, and the debt pile growing in the wake of a profit warning last week, it raises a question: Why is the Government taking the risk with it?

There might actually be a very good reason. Carillion’s problems would get very much worse were the company to stop winning work, and revenue.

We don’t really know how a further deterioration in its financial state might impact upon the other vital jobs it does. We just know that it wouldn't help and that shunning the company until it has sorted itself out might represent even more of a risk than continuing to funnel work its way.

All this demonstrates why Carillon and its peers (many of which have suffered similar problems) are simply too big and important to fail. As I noted last week, that very concern was raised by no less than the National Audit Office.

So expect to see more contract wins for Carillon in the coming weeks. They seem to be awarded on a Buggins’ turn next basis anyway.

As I've written, we really need to find a better way to deliver state services, and perhaps one day we might have a government that recognises that and is prepared to do something about it.

The issue it will have to grasp before it does that is that reducing the role these companies play in Britain’s economy could prove to be quite disruptive.

It is true that most now have international arms, which means they’ll be able to carry on trading if there is a reduced amount of work available in their home market.

But, if the will to do it is ever there, they will still probably need to be weaned off their beloved domestic contracts slowly.