Frank Field demands answers over 'reckless' running of Carillion
A committee of MPs has demanded answers from the trustees of Carillion’s pension scheme and regulators as it opened an investigation into how the company collapsed, leaving behind a retirement scheme with a deficit set to hit £900m.
Frank Field MP, who chairs the work and pensions select committee, said the company’s implosion “begs questions across government” and promised to take evidence from directors and Carillion’s auditor KPMG.
As the committee launched its investigation, some of Carillion’s former staff were thrown a lifeline by Network Rail, which agreed to continue paying contract staff until April.
Royal Bank of Scotland, one of the high street banks that have offered £225m of relief for affected businesses, said it would extend support to any personal banking customers hit by Carillion’s failure.
As ministers and businesses counted the cost of Carillion’s demise, Field wrote to Robin Ellison, the chair of the trustees of Carillion’s 28,000-member retirement schemes, and Lesley Titcomb, the chief executive of the Pensions Regulator.
“It beggars belief that a company can be allowed to run with such apparent recklessness – and be so lucrative for the directors and shareholders – when it has a giant pension deficit and a mountain of debt,” said Field.
He asked what assurances trustees sought from Carillion about its business model and what action they took after its first profit warning last July.
He also asked the trustees and the Pensions Regulator if they had known that chairman Philip Green was found guilty by the pension ombudsman in 1994 of a breach of trust and maladministration regarding the pension scheme of wallpaper firm Coloroll.
Titcomb was asked whether TPR was investigating Carillion and how it reacted to the company’s first profit warning. Carillion’s multiple pension schemes are set to be taken on by the Pension Protection Fund, the government’s lifeboat for retirement schemes that are in deficit when companies go bust.
While the PPF has enough of a surplus to absorb the estimated £900m liabilities, the largest it has ever taken on, pensioners are expected to see their payouts cut by 15%.
A government taskforce has sought to coordinate offers of relief for affected suppliers from banks and Carillion’s corporate clients. On Friday, Network Rail joined Centrica and Nationwide in offering to pay former Carillion contractors until April at least. Train company Arriva said: “We are working closely with Carillion to support their employees at this difficult time, which includes arrangements to ensure staff working on our contracts continue to be paid.”
RBS said on Friday that any affected staff could get refunds on overdraft charges, waivers on withdrawal fees and loan repayments holidays.Rob Davies, The Guardian