Its debts grew to £900 million, an impossibly large sum to manage when its share price was going into freefall during the course of last year.

Plunge

In effect Carillion, chaired by former water company boss Philip Green, had become a mammoth Ponzi scheme in which the cash promised or received for newer contracts was effectively being used to cover up the black holes on the older contracts.

What is unconscionable in all this is that over the past two decades, before its troubles emerged, Carillion paid out vast sums in dividends to shareholders (seeking to keep them sweet) and bonuses to fat-cat directors — including former chief executive Richard Howson, dismissed last July — yet allowed the pension fund deficit to balloon to an officially estimated £900 million.

The burden of sorting this out will now fall squarely on bail-out body the Pension Protection Fund, which is financed by raising a levy on the functioning pension schemes into which millions of us contribute.

Among the more astonishing aspects of the scandal is that even as Carillion’s share price plunged in the second half of last year, Transport Secretary Chris Grayling, as well as other ministers and civil servants, still felt it was safe to gift the firm new contracts. City investors and hedge funders had already recognised that the company was struggling for survival and could no longer pay its thousands of suppliers in good time. If ever there was a case of the Government throwing good money after bad, this was it.

The business-friendly Tory Government, deliberately or naively, awarded Carillion three new contracts within days of the company admitting several major projects had gone wrong to the tune of £800 million — an announcement that provoked a 30 per cent plunge in the group’s shares last July.

A week after that first public warning that it was all going to hell in a handcart, Grayling’s department revealed that Carillion would partner another construction group on a £1.4 billion contract to work on the flagship £56 billion HS2 railway project.

Days later, Carillion was told by the Ministry of Defence it had been chosen to provide ‘catering, retail and leisure’ services for 233 military facilities. These contracts provided some temporary relief for the firm’s books.

But confidence in Carillon’s ability to manage the crisis, in spite of the new contracts, was fading fast, and in September it warned again that profits would fall short of expectations.

Yet the Government still gambled that it was a good bet, and awarded it a key infrastructure project to electrify the railway connecting Corby in Northamptonshire with London.

Ironically, the contracts for these large-scale, taxpayer-funded projects were given out at a time when Carillion’s chief executive and finance director were departing, and the share price was tanking. Yet Whitehall, in their naivety, sailed serenely on.

The collapse of Carillion comes hard on the heels of the decision by Virgin Trains and its partner Stagecoach to hand back the East Coast railway service to the Government, at a potential taxpayer cost of £2 billion. These two disasters have not only left the Government looking very silly, but also given a fillip to those supporters of Jeremy Corbyn on the Left who are convinced capitalism is wicked, and that only re-nationalisation of public services is the answer.

Sure enough, Shadow Cabinet Office minister Jon Trickett has been quick to exploit the misfortunes of Carillion’s workforce and pensioners, asking what ‘due diligence measures were undertaken before awarding contracts worth billions of taxpayer money’.

Failure

What he failed to acknowledge is that the most enthusiastic embrace of private outsourcing companies came during the last Labour government, which used firms such as Carillion to replace Britain’s Victorian hospitals, to build modern schools, expand universities and begin the process of updating the nation’s railways and roads.

Much went wrong at Carillion, including the failure of highly paid auditors KPMG to lay bare the company’s parlous financial state.

But then independent directors and major investors failed to question a record dividend payout to investors of nearly £80 million in 2016, even as the company headed for the rocks and the huge shortfall in the pension fund grew ever larger. (Labour MP Frank Field, who chairs the Pensions Select Committee, castigated Carillion for taking on ‘mega borrowings while its pension deficit ballooned’.)

None of these attacks can be very comfortable for Baroness (Sally) Morgan, former political secretary to Tony Blair, who joined the Carillion board as an independent director in June 2017, shortly before the fateful disclosure to the stock market that the company was in deep trouble.

The collapse of Carillion also shines a light on the wider outsourcing industry, and the ability of huge private firms to be responsible capitalists when they are given hundreds of millions in public money.

Other companies including Serco, Mitie, Balfour Beatty and G4S have all experienced difficulties with Government contracts: there has been a tendency for them to take on too much and become financially over-stretched.

Stupidity

With the help of experts in company turnarounds, some have managed to clean up the contracts under their management and bounce back.

But that surely would have sparked public fury — after all, if capitalism is to survive and thrive as Britain’s chosen economic model then weakness or stupidity must not be allowed to flourish.

Of course, Carillion’s collapse is a dreadful blow, and even now it will prove expensive for taxpayers, who will have to fund the company’s most vital operations until the insolvency practitioners can sell on the contracts.

But it would be a serious misjudgment if this debacle were used as an excuse for bringing an end to the role of private enterprise in building more efficient public services.

Enterprise and ambition in business have been the lifeblood of Britain for centuries. What a shame that it took the collapse of Carillion to remind us how it should not be done.