Fears over jobs as services giant Carillion goes into administration

The offices of Carillion in Manasty Road, Orton Southgate, Peterborough.
The offices of Carillion in Manasty Road, Orton Southgate, Peterborough.
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Unions are calling for urgent reassurances over the jobs, pay and pensions of thousands of workers following the news that Carillion - which has a base in Peterborough - has gone into administration.

The Government has said all Carillion staff should still come to work and “those already receiving their pensions will continue to receive payment”, following the construction giant’s collapse.

Exterior of Hampton Gardens Secondary School. EMN-170829-164759009

Exterior of Hampton Gardens Secondary School. EMN-170829-164759009

Carillion has a base in Manasty Road, Orton Southgate, Peterborough and its recent major contracts in the city included the £43m revamp of Peterborough train station and the new Hampton Gardens school.

Carillion is also one of the companies delivering the A14 Cambridge to Huntingdon improvement scheme.

Officials from several unions representing workers on the railways, construction sites, prisons, hospitals and schools are seeking information from the company and ministers.

Rail, Maritime and Transport union General Secretary Mick Cash said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain.

“We have been warning since Thursday night that we thought the collapse of the company was imminent.”

Jim Kennedy, Unite’s national officer for local government, said a public inquiry was now needed.

“Public services, vast amounts of public money, thousands of jobs - including in a lengthy supply chain of insecure agency workers who are also at risk - and workers’ hard-saved pensions are all in danger of being dragged under by yet another bout of reckless corporate irresponsibility.”

Rehana Azam, national officer of the GMB union, said: “The fact such a massive government contractor like Carillion has been allowed to go into administration shows the complete failure of a system that has put our public services in the grip of shady profit-making contractors.

“The priority now for the Government and administrators is making sure kids in schools still get fed - and our members still have jobs and pensions.

“What’s happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons.”

The stricken firm, which employs 20,000 workers across Britain, said crunch talks over the weekend aimed at driving down debt and shoring up its balance sheet had failed to result in the “short-term financial support” it needed to continue trading while a deal was reached.

Carillion, which has been struggling under £900 million of debt and a £590 million pension deficit, has seen its shares price plunge more than 70% in the past six months after making a string of profit warnings and breaching its financial covenants.

Its collapse poses questions as to why the group continued to receive Government contracts despite issuing a number of profit warnings.

The Government has urged staff to keep going to work and said “those already receiving their pensions will continue to receive payment”.

Britain’s second biggest construction firm is understood to have public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 Army base homes for the Ministry of Defence.

Carillion chairman Philip Green said: “This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

“In recent days, however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

“We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”

The Official Receiver has now been appointed alongside partners at accountancy giant PwC to oversee the liquidation of the company

Cabinet Office Minister David Lidington said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.

“Since profit warnings were first issued in July, the Government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business.

“We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality.

“It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.

“We understand that some members of the public will be concerned by recent news reports. For clarity - all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.”

Alex Mayer MEP for the East of England, said: “Carillion has been on the rocks for months but the Government has buried its head in the sand.

“Jobs, vital infrastructure projects and public services are now at risk.

“We need urgent assurances the A14 improvements will not be delayed.

“Sooner or later the Government must call time on the repeated failures of the private sector.”