Carillion bosses may be ordered to pay into pension fund

The Pensions Regulator (TPR) has confirmed it is considering issuing a "contribution notice" – a legally enforceable demand for a financial contribution to the pension deficit – against former directors of Wolverhampton-based Carillion.

Currently, the Pension Protection Fund (PPF) will be forced to pick up an approximate £800 million bill left in the wake of Carillon's collapse.

But the TPR is investigating whether the company or its directors attempted to avoid their obligations to Carillion's pension schemes. Labour MP Frank Field, chairman of Parliament's Pensions Committee, has calculated that former directors Richard Adam, Richard Howson, Philip Green, Keith Cochrane, Alison Horner and Andrew Dougal pocketed nearly £17 million over a decade at Carillion.

Mr Field said: "The Carillion directors continued to line their pockets as the pension entitlements of their workforce evaporated, with the PPF due to shoulder the staggering pension deficit they left behind.

"It appears though that TPR could set its sights on more than those ill-gotten gains, and go after the directors it finds responsible for everything they've got.

"We urge TPR to take this opportunity to demonstrate the new direction and vigour it keeps professing. Clear, exemplary action, not words, is necessary now to restore any confidence in its ability to do its job and protect the pensions of ordinary people."

Any cash recovered from the bosses would be in addition to what the pension schemes or Pension Protection Fund obtain from assets realised from the company's liquidation, although Mr Field described this as likely to be a "paltry amount".

The National Audit Office has suggested that as little as £44 million will be available to distribute to creditors, with the PPF receiving a share of that amount.

A separate study suggested the PPF could get as little as £12.6 million.

Carillion's liquidation in January left a £900 million debt pile and hundreds of millions of pounds in unfinished public contracts.

Meanwhile the jobs of more than 350 Carillion workers have been secured as they transfer to new companies taking over work from the collapsed construction and services giant.

More than five months on from the collapse of the Wolverhampton based group nearly seven out of every 10 of its 18,000-strong UK workforce have found new jobs.

But 2,375 have been made redundant so far, with another 21 set to leave the business this week.

Another 2,100 are still working on private and public sector contracts while the team from accountants PwC winding down the business try to find buyers to take on the work. That total includes around 150 still working at Carillion's head offices in Salop Street, in Wolverhampton city centre.

They are handling contract details and HR work for PwC. Around 300 people at the offices have lost their jobs so far.

In an update from the Official Receiver, a spokesperson said: "Secure ongoing employment has now been confirmed for a further 352 workers – 68 per cent of the pre-liquidation workfirce have now transferred to new employers. Regrettably a further 21 staff will be leaving the business this week and Jobcentre Plus’ RapidResponse Service will provide them with every support to find new work.

"We continue to discuss with potential purchasers Carillion’s remaining contracts and I am keeping staff, elected employee representatives and unions informed as these arrangements are confirmed."

So far 12,324 jobs have been saved. Around 1,249 employees have left the business during the liquidation through finding new work, retirement or for other reasons.

Meanwhile the Government is aiming to restore confidence in the way it uses private companies to work on private sector contracts in the wake of the Carillion collapse, which is expected to cost the taxpayer £148 million.

Businesses seeking public sector contracts will have to show how they are tackling issues like the gender pay gap, ethnic minority representation and modern slavery under reforms to be announced by the Government.

Suppliers will have to show the "social value" of their operation in the wake of the Carillion collapse in January, said Cabinet Office David Lidington in a speech yesterday.

He said the Government will toughen up the Social Value Act 2013 to "ensure that contracts are awarded on the basis of more than just value for money".

The move will also provide more opportunities for "mutuals, co-operatives and social enterprises", he told the Reform think tank.

Matthew Fell, the CBI's chief UK policy director, said: "The collapse of Carillion was a warning of the dangers of short-termism in public contracts. It's therefore important industry and government learn the right lessons, putting their partnerships on a more sustainable footing to protect public service delivery and people's jobs.

"With public services and infrastructure under growing pressure, it's vital for the government to draw investment and innovation from a healthy, competitive and dynamic marketplace of suppliers of all sizes.

"So businesses will welcome a change of focus to long-term value rather than short-term costs in procurement, and its intention to reduce complexity and cost involved in bidding to allow more SMEs to compete for work."