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Jeremy Corbyn accuses government at PMQs of being 'very negligent' in Carillion demise

Labour leader Jeremy Corbyn has accused Theresa May's government of being "very negligent" for continuing to hand out contracts to collapsed construction firm Carillion after its third profit warning.

Speaking at Prime Minister's Questions, he also demanded Carillion directors be given "not a single penny more" as Labour called on the government to honour all staff wages.

The Insolvency Service later announced bonus payments to directors and severance payments to former executives have been halted after Monday's liquidation.

  • How did Mr Corbyn challenge the PM on Carillion?

Mr Corbyn said Carillion's 90% share price plunge in six months and the firm's record of failing to make wage payments should have forced government intervention.

"It looks like government was handling Carillion contracts to keep the company afloat or was deeply negligent of the crisis that was coming down the line," he said.

Mrs May defended the government's actions, playing down the threat of a profit warning and insisting the government was a "customer" and "not a manager" of Carillion.

"If a government had pulled out every time there was a profit warning that would be the best way to guarantee a company failed," she said.

Asked about bonuses to directors, Mrs May said it was part of the investigation by the official receiver - which will examine past and present directors - to review retrospective payments and determine if they are "lawful or unjustified".

The prime minister - who surprised shadow foreign secretary Emily Thornberry in response to a heckle during the exchanges - was then urged by Mr Corbyn to end the "costly racket" of handing out public contracts to private firms.

He said the likes of Virgin, Stagecoach, Capita and G4S should be "shown the door" after problems with the running of rail franchises, disability assessments and Olympics security.

Mrs May dismissed the suggestion, saying the government would continue to seek the "best value" for the taxpayer and accused the Labour leader of opposing "the private sector as a whole" and putting "politics over people".

Prime Minister Theresa May said the government could have done more damage by intervening after a profit warning.

After Carillion's liquidation it emerged the firm had just £29 million in cash by the time it went bust.

Mr Corbyn has described Carillion's demise as a "watershed moment" that should bring an end to "rip-off privatisation" of public services.