Public Services > Central Government

Whitehall take steps to protect public services, employees and SMEs in wake of Carillion failure

David Bicknell Published 15 January 2018

Manzoni insists dedicated teams have been monitoring Whitehall’s key suppliers while GSA says “properly managed, properly governed, properly scrutinised outsourcing arrangements” should not go bad in this way


The enormity of Carillion’s collapse has left Whitehall trying to understand the impact while putting in contingency plans to protect public services, and support both employees, small and medium-sized enterprises (SMEs) and other Carillion partners that might be impacted.

In a House of Commons statement this afternoon, Cabinet Office minister David Lidington said it was says "regrettable" but as a private company its shareholders will "bear the brunt" and not taxpayers.

He told the Commons that a helpline is being set up to assist employees and pensioners, and the government will help ensure "uninterrupted delivery of public services".

Earlier Cabinet Office permanent secretary and Civil Service chief executive John Manzoni told MPs on the Public Administration Committee that in the past two years, dedicated teams have been in charge to look at the 30 to 35 biggest government suppliers.

"In this case had we had this situation a couple of years ago, the outcome would have been significantly different and probably significantly worse for the public sector than it is today," he said.  

With Carillion providing services to a number of schools, the Department for Education (DfE) has had to investigate the impact of the supplier’s collapse.

A Department for Education spokesperson said, “Our priority is to ensure schools can continue to operate as usual. We have planned extensively for this and have been working with local authorities and academy trusts since before Christmas to make sure contingency plans are in place. We are continuing to offer support to schools help minimise disruption for pupils through our designated advice service.”

In other developments, Capita insisted that although Capita IT Services had previously worked with Carillion in providing IT services for Wolverhampton City Council’s £370m Building Schools for the Future (BSF) programme, it had not had any involvement with the contract, nor other Carillion contracts with Durham County Council and Rochdale Metropolitan Council, for a number of years.

Commenting on Carillion’s collapse, Global Sourcing Association (GSA) UK chief executive Kerry Hallard said, “The collapse of Carillion is, simply, tragic news: the list of major UK services companies is not a huge one and the apparent collapse of one of its number is deeply troubling for the market generally – and perhaps symptomatic of the intense pressures facing the industry today. Be that as it may, however, we have to ask: how did things get this bad for Carillion specifically? How did such a huge and hitherto successful company fail so spectacularly and at such apparent cost?

“While many details have yet to emerge it appears that Carillion’s fall has resulted largely from substantial cost overruns on merely three very large contracts. There are of course countless potential causes of failure in outsourcing – but correct relationship management, constant review and a decent level of transparency go a long way towards safeguarding against such breakdowns, and any autopsy into recent events should certainly examine whether the above factors were present to the requisite standard in the three contracts in question (and, indeed, in any others which contributed to Carillion’s woes.)

“Properly managed, properly governed, properly scrutinised outsourcing arrangements simply should not go bad in this way – and if they do, remedial action should be taken as soon as possible, involving all stakeholders from the start. It’s easy to blame Carillion but those on all sides of these deals had a responsibility for their successful implementation and completion, and it remains to be seen to what extent the right governance was or was not lacking on the part of Carillion’s customers and partners.”

She concluded, “Finding a solution to this crisis which appeals to all parties involved may well be impossible – but whatever the final decision, the priority now must be safeguarding the provision of those public services for which Carillion has up to now been responsible, and protecting as many as possible of those jobs whose future is now in doubt. Anything less would be a failure more significant even than the collapse of one of the country’s most important and most prominent service providers.”



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