Top Carillion executives to face tough questions from MPs

They are being brought before a joint inquiry to explain how the Wolverhampton-based construction and services giant wound up in liquidation with around £5 billion in debt and just £29m in the bank.

The executives can expect to face hostile questioning from MPs on both the Work & Pensions and the Business, Energy and Industrial Strategy (BEIS) committees.

The joint inquiry says Carillion collapsed "leaving a mountain of debt, potential job losses in the thousands, a giant pension deficit and hundreds of millions of pounds of unfinished public contracts with vast on-going costs to the UK taxpayer."

Just last week Rachel Reeves MP, chairman of the BEIS committee, launched an angry attack on the way the company operated: "The collapse of Carillion has left small businesses and sub-contractors out-of-pocket with many left unpaid for months and now facing potential ruin.

"It's clear that Carillion were notorious late-payers, ruthlessly exploiting their position to bully their contractors in a desperate bid to prop up their precarious business model."

Today the MPs will be particularly interested in the evidence from Richard Howson, who was chief executive at Carillion up until the revelation of £845m losses on construction projects last year, which prompted a profits warning.

He stepped down and was replaced as interim chief by Keith Cochrane, who will also give evidence.

So will chairman Phillip Green, former finance directors Zafar Khan and Richard Adam and the FD at the time of the collapse, Emma Mercer.

Reports at the weekend suggested Mr Khan's evidence could be explosive.

He ordered the review by accountants KPMG that reveals the black hole in the construction contracts.

Alison Horner, chair of the Carillion Remuneration Committee which approved controversial pay arrangements for top executives, can also expect hard questions.

It has been suggested that, along with troubled UK contracts such as the Midland Metropolitan Hospital in Smethwick, the Royal Liverpool and the Aberdeen bypass, there was an outstanding £200m bill for a major development in Doha, the capital of Qatar.

Meanwhile a new report says more than 2,600 construction companies became insolvent in the last financial year, with more facing problems because of the collapse of Carillion.

The number of firms going insolvent jumped by eight per cent in 2016-17 compared to the previous year, a study by accountants Moore Stephens found.

Carillion's liquidation has put at risk the future of many other businesses in its supply chain as many will only receive a fraction of what they were owed, said the report.

Construction companies waited an average of 69 days for payment last year, up from 52 days five years earlier, said the report, adding that Carillion had come in for criticism over the extension of its standard payment terms to 120 days.

Lee Causer, of Moore Stephens, said construction consistently has the highest number of insolvencies of all industries in the UK, adding: "The fall of Carillion could be the trigger for even more construction companies going under.

"Carillion has left a huge number of subcontractors out of pocket, when they are already facing enormous financial pressures.

"Profit margins in construction are already very tight and late payment of subcontractors is now standard procedure for far too many in the sector."