Carillion feared to be on verge of collapse after Whitehall rescue talks fail

Construction giant Carillion faces an uncertain future after emergency Whitehall talks failed to produce a rescue plan for the firm which employs 20,000 workers across Britain.

The Government has been under increasing pressure to intervene to prevent the collapse of the company which is heavily involved with a number of key infrastructure projects.

After days of meetings involving Government ministers and company bosses, it was reported Carillion's board was set to make a final survival appeal to lenders ahead of a possible move to appoint administrators.

Labour will question ministers about how the situation was allowed to become so serious and the Unite union called for an inquiry into the crisis.

Meanwhile campaigners have demanded that the company is not bailed out with public money.

Tory chairwoman of the Commons Treasury Committee Nicky Morgan, a former Cabinet minister, said the situation raised serious concerns.

She told BBC Radio 4's The Westminster Hour: "There is the immediate issue about if something happens and the plug is pulled what's going to happen to the delivery of the contracts?

"Of course, there will be questions to be asked. Whether it's my select committee, or the Public Accounts Committee ... who will be asking very searching questions of ministers about who knew what and when."

Carillion is a key supplier to the Government and has contracts in the rail industry, education and NHS.

It has met lenders to discuss options to reduce debts, recapitalise and/or restructure the group's balance sheet.

Administrators could be called in within days unless shareholders, creditors or the Government agree to stump up funds, it is believed.

Carillion has struggled since reporting half-year losses of £1.15 billion and a meeting was held on Friday to discuss its pensions deficit.

Jim Kennedy, Unite's national officer for local government, said: "Public services, vast amounts of public money, thousands of jobs, including in a lengthy supply chain of insecure agency workers who are also at risk, and workers' hard-saved pensions are all in danger of being dragged under by yet another bout of reckless corporate irresponsibility.

"There are also serious questions that need to be asked and answered about Carillion's conduct. Did directors move to protect their bonuses before the financial stability of the company?"

Banks headed by HSBC, Barclays and Santander, have yet to agree on a restructuring plan and are understood to be reluctant to pour in new funding unless the Government is involved in any bailout.

The company is understood to have public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence.

TUC deputy general secretary Paul Nowak said: "Tens of thousands of jobs are now at risk, along with vital public services and major infrastructure projects across the country."

Jon Ashworth, Labour's shadow health secretary, warned the collapse of Carillion could badly impact the health service, where it is running several building projects along with facilities management at a handful of hospitals.

He told Sky News: "I think we need some urgent clarity from the Government about whether, if Carillion sadly goes under, those hospitals will be able to provide meals to patients on the wards this winter."