The committee has released details of government assessment of the outsourcer in the years leading up to its failure in January 2018. As a strategic supplier it was assessed regularly on a red-amber-green (RAG) scale. Suppliers can also be designated a black ‘high risk’ status.

PAC deputy chair Sir Geoffrey Clifton-Brown said this process appeared to be ‘too slow and clunky’.

The official papers show Carillion was moved from green to amber in March 2016, over concerns about its poor performance on a Ministry of Defence (MoD) contract. This was unchanged for the following months and by September 2016, there were also concerns about a Ministry of Justice contract.

By February 2017, the official note to Carillion’s amber rating stated that its shorting interest had gone up to 23.5%, ‘the highest ever position with no sign of shorters believing that Carillion’s financial performance is going to improve.’

For the following three months, the supplier’s rating remained at amber, with new problems noted over some contracts with schools and the NHS.

The rating was only changed to red in July 2017, after Carillion released a trading update suggesting it had £845m of debt and detailing problems with contracts in the UK and Qatar.

While the papers suggest that discussions began about moving Carillion to the ‘high risk’ supplier list in November 2018, in January 2018, the notes accompanying that month’ s proposed red risk rating state that the company had not been graded as ‘high risk’ on the grounds this would ‘not be beneficial’ to the government.

Clifton-Brown said: ‘Profit warnings for Carillion were issued in July and September 2017 and yet a high-risk recommendation to ministers was not made until 29 November 2017. The City, in contrast, knew well before July 2017 that Carillion was in trouble.

‘Too many government facilities contracts were concentrated in one large firm giving the impression that it was too big to fail, hence the perception that the government would bail them out when push came to shove.

‘The Carillion board’s erroneous belief that the government would not let the company collapse appears to have contributed to their failure to take the necessary action to save the company and prevent the sad loss of jobs and damage to numerous suppliers and subcontractors when Carillion went into liquidation.’

Meg Hillier, PAC chair, said the Carillion papers ‘identify clear and compelling problems with the business in the months leading to its collapse. Government had the opportunity to deal with them.

‘The fall-out from Carillion’s collapse and the resulting burden on the public purse is still not clear. We will be seeking clarity on these critical matters and probing suppliers and government about what they are doing to ensure such a catastrophic failure is not repeated.’

Government risk assessments relating to Carillion are here.

Report by Pat Sweet