FILE PHOTO: A Carillion sign in Manchester, Britain July 13, 2017. REUTERS/Phil Noble/File Photo
Carillion was a key contractor to the British government, with 19,000 employees in the UK. It collapsed with liabilities of £7bn and just £29m in cash © Phil Noble/Reuters

The standard of prison maintenance delivered by Carillion was unacceptable, with a lack of investment, severe staff shortages and a backlog of work, said the state-owned company set up to take over its contracts.

Gov Facilities Services Ltd was established with a £4m grant from the Ministry of Justice in February 2018 to take on the maintenance and cleaning of 42 prisons a month after Carillion‘s liquidation.

In its first annual report, GFSL found that Carillion’s record keeping had been poor, there was a lack of data on assets and ultimately “no assurance from Carillion” that it had complied with government requirements that buildings and systems were “suitable and safe for use”.

Paul Ryder, GFSL’s chief executive, said the collapse of Carillion had the potential to cause serious disruption to the running of the prisons and taking over the services had come with a number of challenges.

Carillion “was not providing an acceptable level of service to HMPPS for the estate, a large backlog of work needed to be addressed, there had been a lack of investment in people and materials to carry out the work effectively,” said Mr Ryder. He added that “staff numbers were insufficient and morale was low”.

The outsourcer was a key contractor to the British government, with 19,000 employees in the UK providing everything from construction to hospital and prison cleaning and school meals. It collapsed in January last year, with liabilities of £7bn, and just £29m in cash.

Some 13,945 of employees (around 76 per cent of the workforce) were either transferred in-house or to rival contractors, with just 2,787 employees — mostly head office staff — made redundant.

The government’s insolvency service is still investigating the company. It has three years from Carillion’s collapse to take action against former directors if it decides there has been misconduct. The Financial Reporting Council is also investigating two former Carillion finance directors as well as KPMG, the Big Four accountancy group, over its auditing of the outsourcer.

Carillion was one of three providers managing prison facilities. The others were Mitie, which is having the auditing of its 2017 accounts investigated by the accounting watchdog, and Amey, which is owned by the Spanish infrastructure operator Ferrovial and is up for sale.

Around 1,000 prison facilities management staff were transferred to GFSL from Carillion, and the state-owned company has since added a further 350 employees.

According to the report, agency staff comprised 42 per cent of Carillion’s workforce in 2018/19, making it “difficult to progress our aim for a technically proficient workforce”. GFSL said it has agreed new terms and conditions for staff so it can put employees on permanent contracts.

The company also said it had improved on key indicators, including planned maintenance and emergency breakdown repairs, since taking over from Carillion. According to the report it has completed 504 projects, including the installation of better security and improving “decency standards” in cells, communal areas and showers.

Ian Mackgill, director of OpenOpps, a government procurement adviser, said it appeared Carillion was “not meeting its contractual obligations”.

“That it took the failure of Carillion and the creation of a government-owned company, to resolve this is a concern. How many other outsourcing contracts are there where obligations are not being met?” he said.

Get alerts on UK outsourcing when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article