The 'recklessness, hubris and greed' that left Birmingham's half-built £350m hospital in limbo

The ‘recklessness, hubris and greed’ that left Birmingham’s half-built £350m hospital in limbo

The board of Wolverhampton-based construction giant Carillion presided over a “rotten corporate culture” and “responsible and culpable” for its massively costly demise, MPs have concluded.

A Commons inquiry found that Carillion’s rise and spectacular fall was a story of “recklessness, hubris and greed”, while its business model was “a relentless dash for cash, driven by acquisitions, rising debt and exploitation of suppliers”.

One of the many projects to be left in limbo as a result is the 669-bed Midland Metropolitan Hospital in the Black Country.

This is supposed to replace key services include accident and emergency departments at City Hospital in Birmingham and Sandwell Hospital.

And local NHS managers have warned that the delay in getting it built is damaging their ability to provide high quality services.

But while the hospital is two-thirds built, construction has stalled since the collapse of Carillion in January.

Sandwell and West Birmingham Hospitals Trust has warned that the hospital, previously expected to cost £350 million, will require an extra £125 million to complete, and the planned opening will have to be delayed from 2019 to 2020.

A joint inquiry by the House of Commons Business Committee and the Work and Pensions Committee has laid bare the greed and incompetence of managers at the very top of the company that left the hospital in limbo, along with other projects managed by Carillion across the country.



The Midland Metropolitan Hospital will take in services from City and Sandwell hospitals.

MPs found that the firm, which had around 43,000 employees including 19,000 in the UK, wasn’t as profitable as it appeared.

But Carillion’s board painted a false impression – because they wanted to protect their bonuses.

The MPs said: “Even as the company very publicly began to unravel, the board was concerned with increasing and protecting generous executive bonuses. Carillion was unsustainable.”

Explaining how Carillion misled investors, the MPs said: “Carillion used aggressive accounting policies to present a rosy picture to the markets.

“Maintaining stated contract margins in the face of evidence that showed they were optimistic, and accounting for revenue for work that not even been agreed, enabled it to maintain apparently healthy revenue flows.

“It used its early payment facility for suppliers as a credit card, but did not account for it as borrowing.

“The only cash supporting its profits was that banked by denying money to suppliers.



Carillion House, Wolverhampton
Carillion House, Wolverhampton

“Whether or not all this was within the letter of accountancy law, it was intended to deceive lenders and investors. It was also entirely unsustainable: eventually, Carillion would need to get the cash in.”

And the MPs named three senior managers.

They said: “Richard Adam was Carillion’s Finance Director for 10 years. He was the architect of Carillion’s aggressive accounting policies and resolutely refused to make adequate contributions to the company’s pension schemes, which he considered a ‘waste of money’.”

They added: “Richard Howson, Chief Executive from 2012 to 2017, was the figurehead for a business that careered progressively out of control under his misguidedly self-assured leadership.”



MP Steve McCabe

And they said: “Philip Green joined the board in 2011 and became Chairman in 2014. He was an unquestioning optimist when his role was to challenge. Remarkably, to the end he thought he was the man to head a ‘new leadership team’.”

Birmingham MP Steve McCabe (Lab Selly Oak) said: “There are strong arguments for questioning whether we should persist in this type of model of running prisons, hospitals, things like our benefits system by handing them over to private sector conglomerates.”

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