Carillion bosses could face huge fines following firm's collapse, government reveals

Carillion bosses both past and present could be hit with huge fines over their conduct in the run-up to the firm's collapse, it has emerged.

Cabinet Office minister David Lidington said the official receiver appointed to deal with the liquidation of the company had the power to impose "severe penalties" if misconduct is identified.

The firm - which was awarded around 450 government contracts worth billions of pounds - went into liquidation yesterday morning after failing to secure emergency cash from its lenders.

Thousands of jobs are now at risk, while a question mark hangs over construction projects across the country which Carillion was responsible for.

It has also emerged that in 2016, its board of directors introduced new rules making it harder to claw back bonuses from its executives if the company ran into financial trouble.

In an emergency Commons debate, Lidington said: "It would be wrong of me to pre-empt the inquiry the official receiver will carry out into the conduct of both the present and previous board of directors, but I can say that the official receiver does have the power to impose severe penalties if he finds that misconduct has taken place."

Shadow Cabinet Office minister Jon Trickett said the "simplest and most effective solution" to the crisis was to bring all of Carillion's public sector contracts under government control.

Trickett also demanded answers from the Government on why it had continued to issue contracts to Carillion even after the company issued a profit warning last July.

He added: "This is not the failure of a single company, but the failure of a whole ideological system of contracting out public services.

"Incompetent in office, reckless with taxpayers' money, helpless with public services. Isn't it time the Government made way for an administration that cares and will exercise due diligence?"

A spokesman for Theresa May insisted there was no prospect of taxpayers bailing out Carillion, and that the public services carried out by the company in the transport, health, education and prison sectors would not be affected by its collapse.

He said: "Since profit warnings were first issued in July, the Government has been closely monitoring the situation and has been in constructive discussion with Carillion, while it's sought to re-finance its business. We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality. Our primary responsibility has always been to keep our essential public services running safely."

The spokesman said the Government will pay the company's receivers to ensure services "continue to run as normal", while some services carried out by Carillion may end up being brought "in-house".

He added: "Either way it will be done in a managed and orderly fashion."