UK Labour MPs hit out at Carillion’s ’exorbitant bonuses’ after firms collapse

UK Labour MPs hit out at Carillion’s ’exorbitant bonuses’ after firms collapse

Executives at Carillion should be forced to hand back their "exorbitant bonuses", ministers have been told.

Labour MPs called for the Government to cease wage payments of £600,000 (€675,000) to the firm’s former chief executive and review the UK’s corporate governance laws.

Cabinet Office Minister David Lidington told MPs he understood the concern over pay and bonuses and said the Official Receiver could recover payments if "there is evidence of misconduct".

Labour’s Rachel Reeves, speaking after a ministerial statement on the firm’s collapse, said: "When Carillion collapsed at the weekend they had debts of £900m (€1bn) and a pension deficit of £600m (€675m)

"Yet, year after year after year Carillion paid dividends out to their shareholders and after the chief executive was jettisoned after the profits warning last July, he’s still being paid a salary in excess of £600,000 a year until this coming October.

"Will the Government confirm that those payments to the former chief executive will stop as of today?"

Fellow Labour MP Emma Reynolds said: "It seems that the senior management of Carillion have changed the rules so that they can keep hold of their exorbitant bonuses, does he think that this fair?"

Mr Lidington said he could "completely understand" the "sense of unfairness" expressed by MPs over executive pay.

He added that the Official Receiver "may seek to impose penalties" and recover payments made to executives if "there is evidence of misconduct".

Speaking earlier in the debate Mr Lidington said the Government was "doing everything possible" to minimise the impact of the Carillion collapse.

Mr Lidington did add however that unless private companies were found to pick up the private sector aspects of Carillion’s business in the next 48 hours "those private sector contracts would be terminated".

He said: "All employees should continue to turn up to work confident in the knowledge that they will paid for the public services that they are providing.

"Additionally in order to support staff, and in this instance it will apply to staff working for the private sector as well as the public sector contracts of the Carillion group, we have established a helpline using Jobcentre Plus through its rapid response service.

"The Government is also doing everything it can to minimise the impact on subcontractors and suppliers who like employees will continue to be paid through the official receiver."

Shadow Cabinet Office minister Jon Trickett said of Mr Lidington’s statement: "The House will conclude it was recklessly complacent in seeking to avoid responsibility for the Government and placing the whole responsibility on the company."

Mr Lidington later denied that there was a "blindspot" in the Government’s monitoring of the firm.

He said: "There’s no question of any blindspot.

"Clearly the Government, in common with any other party that was doing business with Carillion did not have access to the company’s books.

"The relevant departments and agencies ensured that there was protection through the creation of joint ventures to key contracts when it was known on the public record that Carillion had difficulties."

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