Carillion redundancies to cost taxpayers £65m, new figures reveal

This is despite government claims that public funds would not be used to pay for construction giant's collapse

The Redundancy Payments Office (RPO) has paid a total of £50m so far to former Carillion staff and said it expects the total to rise by a further £15m (Reuters)

Taxpayers are set to pay £65m to former Carillion workers made redundant since the construction and outsourcing firm collapsed in January, despite government claims that the liquidation would not draw on public funds.

The Redundancy Payments Office (RPO) has so far paid a total of £50m to former Carillion staff and said it expects the total to rise by a further £15m based on the claims it has received.

The figure, obtained through a freedom of information request, does not include workers who lost their jobs at companies in Carillion’s supply chain.

Thousands of smaller firms were adversely affected when Carillion went into liquidation, owing hundreds of millions of pounds to suppliers and subcontractors.

The Unite union, which obtained the new figures, said taxpayers would also have to pay for work to complete several of Carillion’s projects including the Royal Liverpool Hospital and the Midlands Metropolitan Hospital. The cost of concluding these projects is expected to be in excess of £100m, Unite said.

On top of this, public funds may be needed to cover much of the £50m in fees estimated to have been charged to Carillion by PwC, which is handling the liquidation.

Unite said the latest revelations demonstrate that initial government indications that Carillion’s collapse would not impact the taxpayer were "decidedly wide of the mark".

Unite assistant general secretary Gail Cartmail described Carillion’s collapse as the “greatest corporate failure in UK history” and called for a full public inquiry into who was responsible as well as the total cost to the taxpayer.

“These latest figures demonstrate that the taxpayers have had to pick up the tab for the greed and recklessness which led to Carillion’s collapse,” Ms Cartmail said.

“While the directors and senior executives of Carillion have largely slithered off into lucrative new roles, it is the taxpayers who have been left to pick up the pieces from their mess.”

The police should immediately open a criminal inquiry into those responsible, she added. “If no laws were broken then we need better, stronger laws to prosecute the guilty.”

Most of the Carillion’s 19,000 staff had to be made redundant and were then entitled to make a claim for redundancy from the RPO.

This included staff who were transferred to a new employer, however because of Carillion’s compulsory liquidation the Transfer of Undertaking Protection of Employment (TUPE) regulations which protect a worker’s pay, terms and conditions did not apply, nor did rules governing continuation of service.

Workers are therefore considered new starters and have also lost many of their employment rights for a two year period.