Councils provided best profit margin for Carillion
0Local government contracts provided the best profit margins for Carillion, the collapsed construction and outsourcing company, according to a report. The National Audit Office said that council contracts provided margins of 13%–15% for Carillion.
The report concludes that Carillion’s liquidation, following its collapse earlier this year, will cost the government £148m. However, the total cost will be greater because some public sector bodies are paying a 20% premium on post-liquidation services.
Carillion reported revenue of £1.72bn from the UK public sector in 2016. Complexities in the companies accounts and record keeping mean there is no consolidated figure for how much local government was spending with Carillion.
However, the NAO report details that Carillion continued to win work from local government after its first profits warning on 10 July last year, including a £4.1m contract from Leeds City Council to construct a cycle superhighway. Network Rail and the Ministry of Defence also awarded work to Carillion after the warning. The MoD was the biggest spender with Carillion paying £510m for the company’s services in 2016–17.
