PwC does “not regret” its role in deferring payments into the Carillion pension schemes, after it was brought in to advise the scheme's trustees in September 2017.

Giving evidence before the joint Work and Pensions and Business, Energy and Industrial Strategy committees today, 21 March 2018, PwC restructuring and pensions partner Gavin Stoner said that given the position of the company’s balance sheet, not deferring would have had a negative impact on the position of the scheme once the outsourcing firm became insolvent.

Carillion became insolvent on 15 January 2018, and as the official reciever PwC has been tasked with salvaging funds for the Pension Protection Fund (PPF), which will take in 11 of the firm’s 13 pension schemes, amounting to a funding shortfall of £900m.

Stoner said: “The decision to defer is not something I regret, nor the trustee regrets. The business was projected to make less than £200m and had balance sheet debt of £1.4bn, an off-balance sheet debt of the pension scheme and an early payment facility of £400m. This was a difficult case for all of the financial creditors with a lack of information.

“We improved the ranking [of the pension scheme] in terms of the chain of insolvency so there was robust protection and a seat at the table going forward, which has saved the scheme multiple of millions of pounds.”

Stoner added that the decision to defer pension scheme payments was “time bound” as the firm were under pressure to publish its annual results, and also pointed out that the auditing firm were kept in the dark on some of Carillion's financial data.

“If that had been compromised they [the scheme] would have been behind that new money. Asks for additional deferrals were resisted, so approximately 50 per cent of the asks were actually provided”, he said.

Despite this, PwC partner and special manager David Kelly said he did still not know how much credit will be recovered for the PPF, and said it is likely to be June 2018 before it can disclose how much.

PwC has earnt £20m in fees since Carillion become insolvent in January.

Kelly said: “There are 27 different legal entities, and you have to work out the returns of 27 entities from which the PPF will be looking for a dividend.”

Furthermore, the auditing firm confirmed that they stopped consulting the firm “seven or eight months” before it was brought in to advise the pension scheme trustees in September 2017.

In a statement yesterday, Work and Pensions Committee chair, Frank Field, said: “PwC had every incentive to milk the Carillion cow dry. Then, when Carillion finally collapsed, PwC adroitly re-emerged as butcher, packaging up joints of the fallen beast to be flogged off. For this they are handsomely rewarded by the taxpayer.

“They claim to be experts in every aspects of company management. They’re certainly expert in ensuring they get their cut at every stage.”

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