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HS2 construction giant Carillion to go into liquidation after Government refuses taxpayer bail-out

PUBLISHED: 09:58 15 January 2018 | UPDATED: 10:19 15 January 2018

A Carillion crane at a construction site in central London. Picture: Yui Mok/PA Wire

A Carillion crane at a construction site in central London. Picture: Yui Mok/PA Wire

Construction giant Carillion has said it has “no choice but to take steps to enter into compulsory liquidation with immediate effect” after talks failed to find another way to deal with the company’s debts.

Drawings of the planned HS2 station at Euston      Picture: Grimshaw Architects/PA Images Drawings of the planned HS2 station at Euston Picture: Grimshaw Architects/PA Images

The stricken company, which is building the controversial HS2 high-speed rail link employs 20,000 workers across Britain,

It 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 is a key supplier to the Government and has contracts in the rail industry, education and NHS.

It was among companies awarded £6.6bn in contracts by the government to build the new high-speed HS2 railway between London and Birmingham in July.

Unions are calling for urgent reassurances over the jobs, pay and pensions of thousands of workers following the “disastrous” news. 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.

“RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members jobs and pensions.

“The infrastructure and support works must be immediately taken in house with the workforce protected.”

Philip Green, chairman of Carillion, 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.

“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. “

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.

“There are also serious questions that need to be asked and answered about Carillion’s conduct.”

In November last year Carillion announced it had been awarded two contracts on Network Rail’s Midland Mainline improvement programme, including one to upgrade the existing track and infrastructure from London to Corby.

Network Rail said in a statement: “Network Rail is activating its contingency plans as a result of this unfortunate news.

“Passengers can be reassured that their services will be running as normal today as Carillion’s work for Network Rail does not involve the day-to-day running of the railway.

“We will be working closely with the administrators and Carillion’s management team to ensure projects that they are working on continue and that the supply chain is maintained for this important work.

“Our aim is to ensure, as far as possible, that this news has as little impact as possible on our projects to grow and expand the railway network.”

Carillion 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.

In the UK some of its projects have included the Royal Opera House, the Channel Tunnel, Tate Modern, the Library of Birmingham and the famous doughnut building of the UK’s Government Communications Headquarters (GCHQ).

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