John Spellar MP: Ministers 'paralysed by process' over Carillion collapse

Labour MP John Spellar said there had been a 'systematic failure' by ministers, which he said had still not been addressed nearly five months after the Wolverhampton-based firm went into liquidation.

He said the fact that work had still not re-started on the Midland Metropolitan Hospital in Smethwick was evidence of 'paralysis by process'.

Mr Spellar's comments followed a scathing report by the public accounts committee which concluded that the Government had been too slow to spot mounting financial problems at troubled public sector outsourcing company.

The report also revealed that the Cabinet Office decided the contractor was not 'high risk' even as it neared insolvency.

Commenting on the committee's findings in the House of Commons, Warley MP Mr Spellar said: "Does it not demonstrate a clear systemic failure and an unwillingness to confront bad practice, all of which led to significantly greater long-term cost?

"Such failure is still continuing in government. More than four months after the collapse of Carillion, work has still not restarted on the Midland Metropolitan Hospital, and I understand there are similar problems at Liverpool.

"Two thirds of the money for my hospital has already been spent. Security and other costs are rising on a daily basis, and the building will be deteriorating.

"I have raised this issue endlessly with ministers, and with the Prime Minister twice in this Chamber, so will the Committee look at the failure of decision making in government and what is, basically, paralysis by process?"

Labour MP Meg Hillier, chair of the public accounts committee, said the size of contracts had been one of their key concerns.

"If the collapse of a large supplier means that a hospital in our one of our constituencies is not completed, we see that the system is skewed to try to ensure that does not happen, but that means that the interests of the supplier can come first, in that they might end up being bailed out," she added.

"Carillion was deluded in believing that it would be given a bail-out, and we want to examine why it kept believing, right up to the moment of collapse, that a loan would come."

Carillion derived £377m in annual revenues from Government contracts. In a separate report last week two other select committees said the firm had collapsed due to the 'recklessness, hubris and greed' of directors.