Carillion collapses

Carillion, one of Britain's biggest construction and services companies, has collapsed with debts of around £1.5 billion, putting thousands of jobs and major public projects at risk.

The company went into compulsory liquidation on 15 January, after talks with banks and the government failed to agree a rescue.

A government contractor

Carillion employs around 43,000 people worldwide, including about 20,000 in Britain. It provides a wide range of public services, from school meals and cleaning to prison maintenance and road building.

It was working on major projects including the HS2 high-speed rail line and new hospitals, among them the Midland Metropolitan Hospital in Smethwick, near Birmingham, and the Royal Liverpool University Hospital.

What went wrong?

The company ran into trouble after a series of large contracts went wrong, forcing it to make big write-downs. It issued profit warnings last year, and its shares collapsed.

Critics say the company took on too much debt, bid too low for contracts and continued paying dividends to shareholders even as its problems grew.

Services continue

The government says public services will continue, and that staff working on public contracts will be paid. The Official Receiver is running the company while its contracts are transferred to other firms.

But thousands of smaller companies that supplied Carillion face losing money they are owed, and some fear they could go out of business.

Political row

The collapse has sparked a political row. Labour says it shows the failure of outsourcing public services to private companies, and has called for many services to be brought back in-house.

The government says it was right not to use taxpayers' money to bail out a private company, and that outsourcing brings value for money.

Ministers have faced questions about why Carillion continued to be awarded contracts after its profit warnings.

Pensions

Carillion's pension schemes have a large deficit, and around 28,000 members are expected to be moved into the Pension Protection Fund, which may mean smaller pensions for some.

Investigations

The Insolvency Service has been asked to look into the conduct of the company's directors, and MPs are planning an inquiry.

The fate of unfinished projects, including the Midland Metropolitan Hospital, is now uncertain.