Great Western Coffee Shop

I think that I have read, that Carillion have done or are doing some of the civil works for electrification, not the actual trackside works, but civil works for substations and the like.

Bankers urge Downing St to save Carillion
Lenders rebuff contractor’s plan
Group plays key role in HS2 project

Carillion: 'Matter of days' to stop collapse

(https://ichef.bbci.co.uk/news/660/cpsprodpb/14786/production/_99564838_carillion.png)

The future of troubled engineering company Carillion is being discussed at high-level government meetings this weekend, the BBC understands.

The firm is a key government contractor for projects including the HS2 high-speed rail scheme, schools and prisons.  Sources say the firm has a "matter of days" as it teeters on the edge of collapse, with £1.5bn of debt including a pension shortfall of £587m.  Carillion is trying to reach an agreement with creditors.

Liberal Democrat leader Sir Vince Cable said the government must not bail out the struggling construction company, the second largest in the UK.  Sir Vince, a former business secretary, told BBC Breakfast: "They've got to force the shareholders and indeed the creditors, the big banks, to take losses, and then the government can take responsibility for taking the contracts forward and making sure they are delivered."

...

Officials from the justice, transport and business departments will gather this weekend for a meeting chaired by the Cabinet Office.  The consultancy EY has been put on notice in case the company falls into administration.

On Friday, reports that creditors had rejected a potential rescue plan sent Carillion's shares down by more than 28%.  But in Friday's statement, Carillion said: "Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect."  It said the firm remained in constructive dialogue about short-term financing while "longer term discussions are continuing".

The government has said it is "monitoring the situation closely".  A government spokeswoman said: "Carillion is a major supplier to the government with a number of long-term contracts. We are committed to maintaining a healthy supplier market and work closely with our key suppliers."

...

The general secretary of the RMT rail union, Mick Cash, said the government should give Carillion's workers "clear-cut assurances", as thousands of jobs were "hanging by a thread".

It also wants an assurance that operations would be directly transferred over to Network Rail if Carillion goes bust.

Carillion: Banks call for government help

The troubled government contractor Carillion has held talks with its creditor banks this weekend and further meetings are planned for Monday, the BBC understands.

The construction firm owes £900m to RBS, Barclays, HSBC, Lloyds and Santander.  The banks may be able to show Carillion more leniency if the government is able to do its part, according to sources.

The firm's future is also being discussed by government officials.  Carillion is involved in major public projects such as the HS2 high-speed rail line, as well as managing schools and prisons.

How exactly the banks want the government to intervene is unclear.  They could want the government to offer some guarantees in case Carillion cannot pay back its debts.  Or they may want the government to take some of Carillion's key projects back into the public sector.

The TUC has called on the government to "step in" to "guarantee jobs and services".  Deputy general secretary Paul Nowak said: "Tens of thousands of jobs are now at risk, along with vital public services and major infrastructure projects across the country."

New Tory party chairman Brandon Lewis told the BBC the government was keeping "a very close eye on this".  Mr Lewis told the BBC's Andrew Marr Show that the government was "making sure all plans and contingency plans are in place".  But he refused to be drawn on whether the government would bail Carillion out.  "It's a very commercially sensitive situation so I wouldn't comment further than to say I would hope to see that the working capital that they need will be there working with their partners," he said.

Labour peer Lord Adonis, who last month quit a head of the National Infrastructure Commisson, tweeted that the government has "got questions to answer about propping up Carillion with contracts long after its problems clear. Looks like another Grayling bailout!"

Last summer Transport Secretary Chris Grayling awarded Carillion part of the contract to build HS2, a week after the company had issued a profits warning and its chief executive had departed.

[Carillion] is the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.

From The BBC (http://www.bbc.co.uk/news/business-42687032)


Think article should have said "was" rather than "is" ??

Is the Chairman, Philip Green the same Philip green who was at the helm of BHS? If so it raises more questions.

Carillion also tapped SCC for an extra £3 million to complete the job after seemingly under-bidding for the contract. Although the road is open there is still outstanding work - drainage, surface dressing, pavements - that needs completing.

Has the liquidator stopped work, otherwise for the moment still is...

A company in liquidation, rather than administration, ceases trading. So it should be refered to in the past tense.

Carillion had no viable parts of its business that an administrator could continue to run. It also had no viable assets for an administrator to sell to keep the business going until a buyer could be found.

Carillion was, in short, up a certain creek with no paddle.

Network Rail is activating contingency plans following the news that one of its main framework contractors, Carillion, is to enter liquidation.

A spokesperson said that it will be working closely with administrators and Carillion’s management team to ensure the news “has as little impact as possible” on its projects.

This includes ensuring that rail projects that Carillion is currently working on – which amounts to around £150 million to £200 million – continue and that the supply chain is maintained.

There are a number of major contractors who could take over Carillion’s projects.

Carillion is not involved in the day-to-day running of Britain’s railways and Network Rail reassured passengers that services will be operating as normal.

It is however a major rail contractor, working on such projects as Crossrail, HS2 and electrification schemes around the country.

From Global Rail News (https://www.globalrailnews.com/2018/01/15/network-rail-activates-contingency-plans-after-carillion-liquidation/)


My bolding.  Taking a selfish local view, how does this impact electrification and associated work such as platform lengthening ...?

Carillion had no viable parts of its business that an administrator could continue to run. It also had no viable assets for an administrator to sell to keep the business going until a buyer could be found.

A company in liquidation, rather than administration, ceases trading. So it should be refered to in the past tense.

Carillion had no viable parts of its business that an administrator could continue to run. It also had no viable assets for an administrator to sell to keep the business going until a buyer could be found.

Carillion was, in short, up a certain creek with no paddle.

Carillion declares insolvency: information for employees, creditors and suppliers

Information about continuity of public services for employees and suppliers.
Published 15 January 2018      From:    The Insolvency Service

On 15 January 2018, a winding up order was made against Carillion Plc and the court appointed the Official Receiver as the liquidator.

To ensure continuity of public services, the companies will employ workers on the same terms and conditions as before

“Further to the announcement made on 12 January 2018, Carillion continued to engage with its key financial and other stakeholders, including Her Majesty’s Government (’HMG’), over the course of the weekend regarding options to reduce debt and strengthen the group’s balance sheet.

“As part of this engagement, Carillion also asked those stakeholders for limited short term financial support, to enable it to continue to trade whilst longer term engagement continued.

“Despite considerable efforts, those discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect.

“An application was made to the High Court for a compulsory liquidation of Carillion before opening of business today and an order has been granted to appoint the Official Receiver as the liquidator of Carillion.

“We anticipate that the Official Receiver will make an application to the High Court for PricewaterhouseCoopers LLP to be appointed as Special Managers, to act on behalf of the Official Receiver, and we further anticipate that an order will be granted to that effect.

Philip Green, Chairman

On Monday 15 January 2018, the High Court appointed the Official Receiver as liquidator of the above Companies on the petition of the Companies’ directors and simultaneously the Court also appointed Michael John Andrew Jervis, David James Kelly, David Christian Chubb, Peter Dickens, David Matthew Hammond and Russell Downs of PwC, as special managers to support him.

A brief explanation of a compulsory liquidation and the roles of the Official Receiver and special managers will appear here shortly.  In particular, it explains that a special manager is an officer of the court with his/her powers and functions defined by the court.

This website will be regularly updated to provide more information as it becomes available.

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.

I've not seen the court order itself, but I expect it uses the same set of words - and perhaps sequestration as well -  but in a different order. Doesn't his look like the law as described in that great Victorian reference work "Tweedledum and Tweedledee on Legal Terminology"? 

My friend in mod family quarters joked today that it appeared business as usual- not turning up and not doing any work!

Back to serious side, a spokesman for network rail said their Carillion workforce has been instructed to turn up as usual and will be paid as normal. Presumably someone else is underwriting that?

I gather Carillion and kier and A N Other were joint ventures on hs2 for example and are effectively business as usual, as is CarillionAmey partnership.

From Global Rail News (https://www.globalrailnews.com/2018/01/15/network-rail-activates-contingency-plans-after-carillion-liquidation/)


My bolding.  Taking a selfish local view, how does this impact electrification and associated work such as platform lengthening ...?

What I don't understand is why there is no mention of subsidiary companies. For a large group like Carillion, these special managers will be largely occupied trying to realise the value of its parts as going concerns, so as to maximise the money to go to (some) creditors. It may be that legally each is treated separately, but is that enough in practice? The special managers can, I guess, issue instructions to subordinate directors by virtue of being the sole shareholders, but at first sight there are linkages to do with loans and guarantees - at least - that matter in insolvency.

Early days yet for that to be in the media, they are more interested in the fall than the rescue.  I suspect the subsidiaries like Carillion Rail that are enabling parts to continue working and importantly paying wages to the employees.

Carillion directors to be investigated

The government has ordered a fast-track investigation into directors at the failed construction firm Carillion.

The UK's second biggest construction firm went into liquidation on Monday, after running up losses on contracts and struggling with heavy debts.

The business secretary has asked for an investigation by the Official Receiver to be broadened and fast-tracked.

The conduct of directors in charge at the time of the company's failure and previous directors will be examined.

Carillion's business is now in the hands of the official receiver, which is reviewing all of Carillion's contracts. The company employed 43,000 people worldwide, 20,000 in the UK, and had 450 contracts with the UK government.

The government has said that staff and contractors working on public sector service contracts will continue to be paid. But there is concern that big projects, including the construction of hospitals and roads, will be delayed while the details are worked out.

There are also big worries for an estimated 30,000 smaller firms which have been working on Carillion projects in the private sector.  Many are owed money and face a wait to find out if they will get any of it back.

On Monday the government said that firms working on Carillion's private contracts would be paid for another 48 hours. But the latest statement from the Insolvency Service indicates there might be more flexibility.

It says that the Liquidator is talking to Carillion's private sector clients about which services will continue; however contracts will be ended if the client no longer wants to pay for them.

"No one has been dismissed at this point and staff will continue to be paid for the work they perform," a spokesperson for the Insolvency Service said.

Chief executive Richard Howson stepped down in July last year after a profit warning. He had been in charge since the end of 2011.  Keith Cochrane was appointed as interim chief executive.

There has been much criticism over the size of Mr Howson's pay award in 2016 which, including bonuses, totalled about £1.5m. He is also due to receive a salary until October this year.

Finance director Richard Adam, who retired in December 2016 after nine years at Carillion received almost £1.1m in salary and bonuses in 2016.

As well as the conduct of directors, the role of Carillion's auditor KPMG will be examined by the Financial Reporting Council.

"It is important we quickly get the full picture of the events which caused Carillion to enter liquidation," said Business Secretary, Greg Clark, in a statement.  "Any evidence of misconduct will be taken very seriously," he said.

Shadow chancellor John McDonnell said the government had become "too close" to Carillion.  "We need full transparency on meetings and discussions that took place between government ministers, civil servants and representatives of Carillion and what warnings were given to ministers and what actions recommended implemented or not," he said.

Chief Secretary to the Treasury Liz Truss described his comments as "cheap political shots".

Carillion was left with just £29m before going bankrupt

Carillion was in talks with the government since October as part of a desperate bid to stave off collapse, according to the chief executive.

Keith Cochrane says the construction giant was left with just £29m in cash by the time it went bust on Monday.

Until the last moments, directors still believed a rescue was possible, but banks become more demanding, he said.

The details are included in a document Mr Cochrane has prepared as part of the insolvency process.

His statement details the failure of every attempt to save Britain's second biggest construction company after three profits warnings and a collapse in the share price.

Efforts to sell off parts of the business collapsed and Carillion's banks became more demanding, only agreeing fresh funding under tight new conditions that the company was unable to meet, the statement discloses.

There had been regular meetings with the government and its advisers in the final few months of 2017, Mr Cochrane says. But on 31 December a "formal request" was made for support from the government.

Even as late as last weekend, directors believed that "a constructive dialogue" was underway with banks and the government about providing short-term funding.

Directors wanted the government to "guarantee" more funding for four months while Carillion continued its restructuring, and be allowed to defer tax payments. Both requests were refused, according to Mr Cochrane.

But his document adds that "certain of the group's lenders took unilateral action which in the company's view undermined the group's efforts to conserve cash".

He singles out Royal Bank of Scotland (RBS) as one of the banks that wanted to impose tough new lending conditions.

Running out of cash, Carillion declared itself insolvent on Monday. Rather than attempt an orderly administration of Carillion in the hope of salvaging something from the business, the Official Receiver was appointed to liquidate the business.

Accountants EY and PwC both rejected requests to become administrators because there was no money left to keep the company ticking over, Mr Cochrane says.

RBS said in a statement to the BBC that it had "provided considerable support and forbearance to Carillion over many months".

"The judgement of the bank was that the restructuring plan put forward by the company was not viable and therefore we took the difficult decision not to extend further funding and increase our exposure to the business.

"We need to balance the interests of all our stakeholders when taking these decisions, and on that basis, we regrettably were not in a position to continue to put further funds into the business."

Meanwhile, Treasury minister Liz Truss told the Commons on Tuesday that "it would be completely wrong for a public company that got itself in this state to be bailed out by the state".

Meanwhile, Treasury minister Liz Truss told the Commons on Tuesday that "it would be completely wrong for a public company that got itself in this state to be bailed out by the state".

I actually meant no mention in the Insolvency Act 1986. PWC's statement hints at this going on, but it could be read - particularly the bit about everyone being paid during the liquidations - as applying only to work on public services contracted to or via Carillion companies.

The dramatic collapse of Carillion has started to hit thousands of the firm’s suppliers, as the real world impact of the demise starts to emerge.

Subcontractors owed money by the construction and services giant are already being pressurised by their banks and have begun laying off workers, as the threat of contagion afflicting the sector was likened to a near re-run of the banking crisis.

[snip]

Contractors were being paid 120 days after invoicing Carillion, but often have to pay their own workers on a weekly basis.

https://www.theguardian.com/business/2018/jan/16/carillion-subcontractors-laying-off-staff-collapse


Yuk!

My bolding.  Taking a selfish local view, how does this impact electrification and associated work such as platform lengthening ...?

I fear that this work will be cut back, over budget and delivered late.  :)

The Companies are continuing to trade.

Unless advised otherwise, all agents, subcontractors and suppliers should continue to work and provide goods and services as normal, under their existing contracts, terms and conditions.

You will get paid for goods and services you supply from 15 January 2018. Over the coming days we will review supplier contracts and we’ll contact you concerning these soon.  Goods and services you supply during the liquidation will be paid for. A letter will be sent to suppliers shortly containing further instructions. In the first instance, please speak to your usual contact at the Companies.  Matters requiring the specific attention of the Special Managers can be sent to:

sharedservices.carillion@uk.pwc.com

In your email please state your name, your company name, the name of your usual contact at the group and any other information you think will be useful. This will allow us to answer your query as quickly as possibly.

Your co-operation will allow the Companies to continue trading with minimal disruption.

It seems that the Official Receiver is running the liquidations as close to an administration as possible. Presumably that will cost money, though selling the best bits of the group should pay that back (assuming that's how the rules work). Certainly letting most subsidiaries cease trading would yield a lot less.

They (i.e. PWC) are saying this to suppliers (and similar things for employees and other groups):

That does seem to contradict a lot of press comment, as well as the reported behavior of site managers. I did wonder whether closing a site was directed from above, jumping to conclusions, or just a standard precaution - subcontractors and employees who fear they will be off the job and not get paid have been known to get their retaliation in first.

PWC have not yet provided any of the explanation of how the process will work that they promised, which is unfortunate. So, for a start, what are "the companies"? Formally, the holding company and five other top-level companies are covered by court orders. Does that mean those are still trading? Or is it just other subsidiaries, JVs, etc.? Or what?

Bonuses for Carillion bosses are blocked

Bosses and directors of Carillion will not get bonuses or severance payments, the government has said.

The Insolvency Service said no such payments had been made since the construction firm collapsed on Monday.

The announcement comes as work on Carillion's public sector construction sites is paused pending decisions about their future.

However, work on most of its private sector service contracts, such as catering and cleaning, will carry on.

Carillion's customers want existing services to continue until new suppliers can be found and will provide funding to retain staff for the moment.

Several former executives of the firm would have received pay and benefits this year.

• Carillion had agreed to keep paying former chief executive Richard Howson a £660,000 salary and £28,000 in benefits until October as part of his departure deal.
• Former finance chief Zafar Khan, who left Carillion in September, was due to receive £425,000 in base salary for 12 months
• Interim chief executive Keith Cochrane was due to be paid his £750,000 salary until July, despite being due to leave next month.

On Wednesday, Business Secretary Greg Clark met representatives of some banks to seek assurances that they would support small businesses affected by the Carillion collapse.

Afterwards, he said UK lenders were ready to give "tailored support" and flexibility when it came to repayments.

About 30,000 smaller firms which have been working on Carillion projects in the private sector face an uncertain future and are waiting to learn whether they will be able to get hold of money owed to them.

HMRC said it will also help affected contractors, offering them more time to pay tax bills and providing workers with cash support through the tax credits system.

At Prime Minister's Questions on Wednesday, Labour leader Jeremy Corbyn hit out at the "wildly excessive" bonuses paid to Carillion directors.

He also accused the government of negligence, saying it awarded contracts to Carillion even when it became clear the company had problems.

Mr Corbyn also called on the government to end the "costly racket" of private sector firms running public services.

Mrs May said a third of government contracts with Carillion were agreed by the previous Labour administration, adding she wanted to provide "good quality public services, delivered at best value to the taxpayer".

Earlier GMB union boss Tim Roache had said the government's response to the Carillion crisis had been "inadequate and inept".

He said that his union had called on Mr Clark to set up a task force to help private sector companies and employees affected by Carillion's collapse.

He called on other private sector companies to take on affected workers without a change in their terms and conditions - a process that he admitted would not be a short one.

Mrs May said a third of government contracts with Carillion were agreed by the previous Labour administration,

Were they in financial difficulty back before 2010, if not irrelevant Mrs May.

And of course that means two thirds of them were agreed with the Conservatives or the Con/Lib Coalition. 

Carillion: The signals that the company was going bust

(https://ichef.bbci.co.uk/news/660/cpsprodpb/D166/production/_99660635_carillion.jpg)

Carillion's collapse was for many people a bolt from the blue - a large UK company that had no obvious problems went bust in a little more than a year.

Even the company's directors seemed to have no idea what was about to happen. In the annual report published in March, they signed off a "viability" statement saying there was no reason to think the company would have financial difficulties in the next three years.

Outside the company, however, there was widespread scepticism.

Investors had begun betting against Carillion shares as long ago as 2013.

Six months ago, at the height of the City scepticism, one quarter of all the company's shares were being used in "short" trades, an unheard of proportion for a large quoted company.

One hedge fund manager complained at the time that the trade had become so popular that it was no longer worth doing - the cost of borrowing Carillion shares, normally the necessary precursor to placing a short trade, had become prohibitive.

What did the short-sellers see that the company's board could not? Here are four of the tell-tale signs that (with hindsight) gave hedge funds and others sufficient confidence to bet that the company's shares would fall.

It's too good to be true

Carillion reported average margins of about 4%, twice the normal going rate for construction companies.

While some of this could be explained by the company's mix of business, with potentially lucrative service contracts and high-margin work in the Middle East, it seemed suspiciously high to some investors.

And high-margin work is good, as long as you actually receive payment. Industry insiders say Carillion was owed about £400m from Middle East contracts when it went under.

Longer payment terms

Construction industry veterans know that when main contractors come under pressure, their first port of call is making subcontractors wait for their money.

Late payment is endemic in construction, but Carillion was making its suppliers wait 120 days.

There was other evidence too; stories in the trade press about the woes of angry subcontractors, which enough to give keen-eyed hedge funds reason to think that cash was tight at Carillion.

Debts may have been larger than most thought

Carillion had plenty of debt - about £850m at the time of its last annual report - although this had grown much larger by the time of its demise.

But that figure did not give a full picture. To help speed payment to its subcontractors, Carillion, in common with other large contractors, used a system called the Early Payment Facility.

Its suppliers could take their invoice to one of Carillion's lenders and be paid. The bank took a fee, and Carillion no longer owed the subcontractor, but the bank.

This sum was not included in the published debt figure, but was in the accounts under a different heading - if you knew where to look.

A new regime coming

All companies that have long-term contracts have to wrestle with the tricky question of when the profits should be recognised in the accounts.

If they abide by the actual flow of cash from the deals, then the results would be very lumpy, with big losses early on followed, hopefully, by profits in the final years.

Accounting rules allow companies to smooth the profits out, but it is a matter of judgement. If the judgement is too optimistic, profits can be booked too early.

The accounting rules are changing, with a new standard (IFRS 15) coming into force this year. It will force companies to be tougher, matching reported profits much more closely to actual cash flows.

It is not an unreasonable assumption for a hedge fund that the new accounting standard would be likely to hit Carillion's reported profitability.

It is worth remembering that the investors were betting only that the share price would fall.

Most probably expected that - as had happened with Carillion's big rival Balfour Beatty a few years earlier - there would be a string of profits warnings, a share price plunge, painful write-offs and a slow crawl back to normality.

It turned out to be much worse than that. As the interim chief executive Keith Cochrane set out in his witness statement to the court that approved the liquidation, the company had nearly no cash left at all.

The court requires a deposit to be paid to secure the liquidator's services; Carillion did not have it, relying instead on the government to come up with the sum.

The Financial Conduct Authority keeps a record of short positions in companies listed on the London Stock Exchange. Bear in mind that while the short sellers turned out to be right about Carillion, they have been wrong many other times.

And a short position may be just one part of a wider trading strategy - the table does not tell you anything about the reasons for the trades, or the wider context.

I reported a while back that workers for Carillion had set up a works compound near my home to staballise an embankment. I have noticed since last week that some of the plant and containers which were on this site have gone. ....

Really stupid question - how's the work been going?  Could the phase that needed the heavy plant have been completed?

When the compound was sent up talking to operatives, the work was scheduled to run until April. The plant 'parked up' was used to lift the 'L' shaped pre-cast concrete fabrications off the lorries that delivered them to the site. The work which has taken place is all 'hidden' behind houses and can't be seen from the highway but the work remaining which can be seen from the highway involves shoring up an increasingly higher embankment which rises to where the railway crosses a road which dips down under the railway line and nearly always floods in heavy rain.

Going out later today and will report how the general electrification work is going in the area but quite frankly I'm disappointed at the progress, or rather the lack of it  really since the August/September blocks on the Badminton line, Westerleigh Junction - Wotton Bassett line and then the Bristol Parkway - Westerleigh Junction section too. 

If its a Network rail project it should be continuing; NR has agreed with the Liquidators to pay suppliers backdated to a certain date (cannot recall the date) and to continue to pay certainly up until April, the agreement with the Liquidators also include Carillion employees.  It might have taken a few days to sort out some of the details before work restarted.

.......However, although payments will be made directly by Network Rail to about 300 smaller suppliers, these will not help larger sub-contractors. Network Rail said ways of helping them will 'continue to be explored'.

The payments of arrears are the result of an agreement between Network Rail and accountancy firm PwC, which has been instructed to manage Carillion’s affairs by the Official Receiver. The payments will cover the period between Christmas and 15 January, when Carillion went into liquidation.
......

Capita shares have plunged almost 50% after the outsourcing firm warned on profits and announced a major shake-up.

New chief executive Jonathan Lewis said the company had become "too complex" and "driven by a short-term focus" and needed to change its approach.

Capita, which issued a series of profit warnings last year, has again cut its profit forecast and revealed plans to raise £700m by issuing new shares.

The move comes after outsourcing rival Carillion collapsed earlier this month.

[etc]

http://www.bbc.co.uk/news/business-42885211


My bolding.  Industry sector problem?

Capita is often spelt with an "r" inserted between the first two letters, there are numerous reasons for this.

I for one will laugh if they bust, serves them right. I would of course feel sorry for staff, suppliers and sub contractors, who faced loss or worry, but for capita as a company "just desserts"

We should all remember we have been told time and time again ..........

The competitive tendering of out sourcing the out sourcing is the most efficient and cost effective way to do business ......................................

We should all remember we have been told time and time again ..........

The competitive tendering of out sourcing the out sourcing is the most efficient and cost effective way to do business ......................................

I've never been fully convinced why a publicly owned body should not be allowed to operate on commercial principles with the shareholders being the taxpayer. This includes raising funds by government bond issues if needed with the returns going to the bond holders.

Looking at where investors are putting their money, or rather aren't, at the moment, I predict one or two more of these type of companies will fold this year.

I’ve always questioned how outsourcing can be cheaper and make a profit....
A former employer outsourced cleaning for cheaper than the minimum wage they were already paying their cleaners. Then the cooks in the canteen were outsourced, again for cheaper than minimum wage. How can it be possible to make profit for cheaper than employing a minimum wage in house? The savings on cleaning products would be minimal I imagine?

What i am already hearing from the outsourcing and so-called public-service industry is that the basic problem is that the government pays too little for intrinsically risky and complicated work.
Which is a bad joke.
No one forced Carillion - or any of the other members of a bruised and battered industry - to bid for the contracts.
When George Osborne and Francis Maude put the screws on them in 2010 as part of their austerity drive, the outsourcing companies could have just walked away.
That they didn’t is another triumph of short-term thinking, the endemic disease of British industry.

Amey buys Carillion rail contracts, saving 700 jobs

The jobs of more than 700 Carillion employees who were working on Network Rail contracts have been saved after Amey bought the contracts

More than 700 rail industry jobs have been saved after British company Amey swept in to buy up a wave of contracts previously owned by the collapsed outsourcer Carillion.

Amey Rail will now take on the contracts for work on projects in the East Midlands, London and the North West, safeguarding more than two thirds of the roughly 1,000 Carillion workers on Network Rail projects and potentially hundreds more involved in the supply chain.

Network Rail said Amey had bought a “significant number” of Carillion’s contracts, including work on some of its most complex projects such as the North West electrification programme and work related to Crossrail at Old Oak Common, but did not disclose financial details of the transactions.

Matthew Steele, commercial director at Network Rail, said the move ensured the delivery of several major rail projects, something which would be a relief to workers who have been worried about their future.

“We do recognise that this has been a very unsettling period for the employees of Carillion and would like to thank them for the continued commitment to the delivery of these projects,” Mr Steele said.

“We remain focused on the transfer of remaining projects and employees to new arrangements over the coming weeks and months.”

Network Rail, which is state-run, said it was continuing to work with auditor PwC on other Carillion contracts and staff to be transferred to new companies. It confirmed work was continuing on Carillion projects while new contractors were found after an agreement that PwC would pay Carillion employees’ wages until after Easter and after many of the construction company's smaller rail suppliers were paid the arrears they were owed to ensure the continued delivery of important projects.

Earlier this month, the Official Receiver overseeing Carillion’s liquidation said 6,668 jobs had been saved and 1,141 people had been made redundant as a result of the January collapse, forced upon the company by a large pension deficit and debts totalling roughly £1.5bn.

The former Carillon site in Oxford has been renamed 'Network Rail Project Office' so maybe Amey haven't taken over that contract.

Maybe not - if it just means that office works on a/the Network Rail Project. Not naming who's doing the work is useful if you don't know who you are working for.

Carillion is bust, leaving job losses, underfunded pension schemes and half-finished hospitals in its wake. The east coast mainline is a shambles – again. Interserve, a company with 25,000 staff in the UK supplying the public sector in health, education and defence, is being watched closely by the government in case the crisis in the outsourcing industry gets worse. Capita, which used to be seen as a source of stability, is trying to remove doubts about its own future by raising £700m via a rights issue. Its shares have collapsed from £13 to 175p in less than three years.....


Carillion et al will, let’s hope, mark the end of stupid, unthinking outsourcing – and should certainly spell curtains for the most rotten PFI contracts that have undoubtedly proved a waste of money for the public purse. But the notion that outsourcing can be abolished altogether seems fanciful.
....

Rupert Soames, chief executive of Serco, offered an excellent summary last week that should not be dismissed just because he is an interested party. Soames has spent four years cleaning up the mess at Serco, the result of corporate hubris and scandal, and is certainly not portraying the private sector as an innocent party....

Around 2010, argues Soames, the balance of power in the outsourcing market began to turn. Government, too often naive in its buying, sought to cut expenditure and put the squeeze on a sector that had attracted new entrants chasing fat profits.

“Feeling compelled to deliver the growth they had promised, suppliers competed fiercely for a reducing pool of new business,” he says. “Prices fell, and a newly savvy government discovered it had anxious suppliers prepared to accept risks and contract terms which in normal conditions they would not have agreed to. Sophisticated buying techniques were imported from the private sector; contracts for sensitive public services such as caring for asylum seekers were awarded to the lowest bidder by online auction.”

There ought to be a better middle way. Soames has four ideas, all of which deserve a hearing. First, insist on more transparency: open-book accounting would allow the Cabinet Office or National Audit Office to see what’s really happening with major contracts. Second, write contracts with break clauses on both sides, so government can escape overgenerous arrangements and firms can get out of life-threatening deals. Third, firms should write “living wills” so that contracts can be handed back safely and without disruption. Fourth, there should be a code of conduct: governments shouldn’t transfer unmanageable risks and firms should fund pensions properly, have strong balance sheets and pay their own suppliers promptly....

The report, published on Monday, found that ministers try to spend as little money as possible when awarding contracts while forcing contractors to take unacceptable levels of financial risk.

Often the government does not fully understand the risks it is transferring to private companies, the committee says. It also fails to appreciate differences in quality provided by rival bidders because procurement decisions are driven by price.

As a result, public services have deteriorated as companies concluded that cost, rather than quality of services, is the government’s consistent priority.

Sir Bernard Jenkin, the Conservative MP who chairs the committee, says: “It is staggering that the government has attempted to push risks that it does not understand on to contractors and has so misunderstood its costs. It has accepted bids below what it costs to provide the service, so that the contract has had to be renegotiated.”

The credibility of reports and opinions issued by auditors in connection with financial statements depends upon beliefs concerning the integrity, objectivity and independence of auditors and the quality of the audit work performed.

The number, range, and seriousness of the deficiencies in the audits of Carillion during the period leading up to its failure was exceptional and undermined that credibility and the public trust in audit. This is reflected in the financial sanction imposed on KPMG LLP, the highest ever imposed by the FRC.

Many of the breaches involve failing to adhere to the most basic and fundamental audit concepts such as to act with professional scepticism and to obtain sufficient appropriate audit evidence. The breaches in relation to the 2016 audit even include failing to ensure that the audit process itself was properly managed and that the audit file was a reliable record. These requirements lie at the heart of proper auditing.

The seriousness of the failings in the 2016 audit is compounded by the breaches of the Ethical Standards relating to the fundamental principles of objectivity, independence, and integrity.

Singed - I bet there were just a few that felt it....