Taxpayers set to pay £65m for Carillion redundancy payments

UK taxpayers will have to pay £65m to cover redundancy payments for former Carillion workers who were made redundant after the company’s collapse in January.

According to union Unite, the Redundancy Payments Office has already made substantial payments to former Carillion staff, a spokesperson from the office said: “The total amount we may pay out is approximately £65m of which £50m has been paid so far based on actual claims received.”

As Carillion collapsed into compulsory liquidation, rather than enter a managed form of administration, the vast majority of the company’s 19,000 staff had to be made redundant and were then entitled to make a claim for redundancy, from the RPO.

These revelations show that initial government indications that Carillion’s collapse would not impact the taxpayer could be wrong.

Accountancy firm PwC, who were engaged by the Insolvency Service to break up Carillion and transfer its outsourcing contracts to new providers, are expected to have earned around £50m from the company’s collapse. And around half of that sum will be paid by taxpayers since Carillion only had £29m left in the bank when it met its demise.

According to Unite, the taxpayer will also have to pick up the bill for the work to complete several of Carillion’s key strategic projects including the Royal Liverpool Hospital and the Midlands Metropolitan Hospital, in Sandwell west midlands. The cost of concluding these projects is expected to be over £100m.

Unite assistant general secretary Gail Cartmail said on Tuesday: “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.”

“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.

“These revelations further underline why the government must order a full public inquiry into Carillion’s collapse to not only understand who was responsible for the greatest corporate failure in UK history but also the total cost to the taxpayer.

Additionally the police need to undertake an immediate criminal investigation into those responsible for Carillion’s collapse. If no laws were broken then we need better stronger laws to prosecute the guilty,” she concluded.