BONUSES being paid to senior figures at Carillion have been stopped as most workers received assurances over pay.
Labour leader Jeremy Corbyn hit out during Prime Minister’s Questions over the “wildly excessive” rewards given to directors of the collapsed contractor, as it emerged that the UK’s second-biggest construction firm had just £29 million in cash when it went bust.
The small reserves are in contrast with a debt burden of £900m and a pensions deficit of almost £590m.
Corbyn said the large salaries and bonuses given to executives while the jobs of its 20,000 UK staff were at risk proved the existence of “one rule for the super-rich, another for everybody else”.
The Insolvency Service has now confirmed bonuses, including those that are part of severance packages for former executives, have been halted as a result of the company’s fall into liquidation on Monday.
A spokesperson said: “Any bonus payment to directors, beyond the liquidation date, have been stopped and this includes the severance payments which were being paid to some senior executives who left the company.”
The service also said nine out of 10 of Carillion’s private customers had indicated that they want it to continue providing services – including property maintenance and school meals provision – until new suppliers can be found, and will provide funding to keep employees on. However, unions reported cases of lay-offs and closed construction sites in several parts of the UK.
The Insolvency Service said these have been put on pause “pending decisions as to how and if they will be restarted”.
Brian Berry, chief executive of the Federation of Master Builders, warned there may be a “domino effect” among smaller sub-contractors. He said: “We are in a very precarious position where thousands of workers don’t know quite what their position is and often they can’t get on site.
“Carillion aren’t doing the work, they are relying on sub-contractors to do the actual building work. Those companies are relying on the money coming from Carillion, that has stopped.”
The Scottish Government has set up helplines for companies and apprentices affected here. Carillion has two offices in Scotland, as well as contracts for the maintenance of Ministry of Defence properties, Network Rail upgrade projects and the Aberdeen bypass.
Meanwhile, Unite leader Len McCluskey said the Government had a “moral duty” to provide direct financial assistance to sub-contractors and suppliers.
Asked in the House of Commons to offer greater help for workers and apprentices, Theresa May said those on Carillion’s public service projects should continue turning up to work, “confident in the knowledge that they will be paid”.
However, she added: “The Government is not running Carillion. The Government is a customer of Carillion, and our focus has been on ensuring that we are providing the public services – they are continuing to be provided uninterrupted – to reassure workers on those public services that they will get paid, to reassure the pensioners and ensure support is there for them.”
Corbyn said the Government’s handing out of contracts to Carillion as its finances worsened suggested ministers were either trying to keep the company afloat or were “deeply negligent”.
He told the Commons: “Between July and the end of last year the share price fell by 90 per cent, three profit warnings were issued and, unbelievably, some contracts were awarded by the Government even after the third profit warning.”
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