Carillion’s key creditors are due to meet government officials on Monday in a last ditch bid to prevent the construction giant’s collapse.

It comes as the chairman of a key group of MPs says there may need to be an inquiry into how public contracts are awarded to companies like Carillion.

Labour and unions say warnings about the firm’s financial woes were ignored.

Carillion is involved in major projects like the HS2 high-speed rail line, as well as managing schools and prisons.

It has debts of £1.5bn and a £587m pensions shortfall.

Without a financial restructuring, the UK’s second largest construction company, which has 43,000 staff worldwide – 20,000 in the UK – looks set to go into administration.

Accountancy firm EY has been put on notice to step in to run the company if the talks fail.

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Carillion’s main bank creditors – including RBS, Barclays, HSBC, Lloyds and Santander UK – are owed about £900m.

They have indicated an unwillingness to put more money into the company without direct intervention from the government.

Talks involving government officials and company bosses were held throughout the weekend. The officials are expected to meet key creditors early on Monday, the BBC has been told.

It is understood that the creditors want the government to guarantee some of Carillion’s debt payments. But that would be, in effect, helping to bail out a private company.