Carillion on the brink as talks continue over weekend

Hopes are understood to now be pinned on proposals for a £300-£400 million loan backed by the Government to keep the company going while it tries to sort out its long term finances.

But this would need to win approval from EU regulators to comply with European state aid rules, even if the Government gave it the green light.

Meanwhile it has been reported that a 50-strong team from accountants PwC have been drafted into the advise government departments on contingency plans in the event of Carillion going into administration.

A Government spokesperson said: "Carillion is a major supplier to Government so we are continuing to carefully monitor the situation while working to ensure our contingency plans are robust. The company has kept us informed of the steps it is taking to restructure the business."

Employing almost half its 40,000 global workforce in the UK – including around 400 at its city centre headquarters in Wolverhampton – the company manages nearly 900 school buildings nationwide – several in Wolverhampton – as well as 50,000 homes for the Ministry of Defence. It is the second largest supplier of maintenance services for Network Rail and is working on scores of major road improvement projects nationwide, including the M6.

It has also been awarded work on the HS2 railway scheme, prompting questions today from Labour over why Carillion was awarded nearly £2 billion of Government work after it had already revealed serious financial problems last year.

After revealing £850m of losses on major construction contracts in the Middle East and the UK last summer – believed to include the delayed Midland Metropolitan Hospital project in Smethwick – the company has issued three profits warnings and seen its share price fall more than 90 per cent as it struggles to short up its finances and sell off parts of the business.

Today Labour called on the Government to reveal why it awarded three contracts worth nearly £2 billion, despite it being government policy to designate a company as “High Risk” if it issues a profit warning.

It has also been revealed that since September there has been no Crown Representative appointed by the Cabinet Office to manage relationships between the Government and Carillion.

Jon Trickett MP, Labour’s Shadow Cabinet Office Minister, said: “Alarm bells have been ringing for over six months about the state of Carillion’s finances, so the Government must come forward and answer questions on exactly what due diligence measures were undertaken, before awarding contracts to Carillion worth billions of taxpayers' money."

Since its first profits warning in July Carillion has been awarded a £1.4bn HS2 contract, £158m of site maintenance work for the MoD and £320m of work for Network Rail.