NAO report shows that Carillion ‘hoodwinked’ the government

Senior Labour MP, Frank Field, has said the recent report by the National Audit Office (NAO) shows that Carillion had ‘hoodwinked’ the government right up to the shock profits warning it issued as recently as July 2017.

Field’s comments come just as it has been revealed that accountants and lawyers will rake in £70m managing the fallout from Carillion’s collapse, while tens of thousands of sub-contractors owed around £2bn will receive only £164m to cover their losses.

PwC, one of the Big4 accounting firms, earned £17m in fees from Carillion in the decade before it went bust and is now expected to earn another £50m from its demise.

The Chair of the House of Commons Business Committee, Rachel Reeves MP, said that the Big 4 accounting firms: “make a killing in fees advising struggling companies how to turn them around and they then pocket millions tidying up when that advice fails. On Carillion, taxpayers are left to foot the multi million pound bill for corporate failure.”

Frank Field added: ” More money for PwC is less money for sub-contractors and the Pension Protection Fund.”

The report issued by the Committee last month also recommended that the government considers breaking up the Big 4 accountancy firms as a result, in part, of Carillion’s collapse.

The NAO report says that the cost to the Cabinet Office of the collapse of Carillion was originally calculated to be c £148m, but that figure is “likely to be higher” to the taxpayer, possibly as high as £566m, as the wider impact to the economy and disputes with Carillion clients is taken into account.