Carillion collapse sparks calls to halt controversial HS2 rail scheme
- Credit: PA
The collapse of outsourcing firm Carillion has led campaigners battling high speed rail scheme HS2 to call for a halt to its progress.
Construction giant Carillion said it had “no choice but to take steps to enter into compulsory liquidation” after talks failed to find a way to deal with its debts.
The stricken company employs 20,000 workers across Britain and is helping to build the a multi-billion pound high speed railway linking London to the regions.
Following news of its collapse, Stop HS2 campaign manager Joe Rukin said: “This is just the latest mess in a parade of spectacular disasters that have plagued the idiotic vanity project that is HS2. The fact Carillion were even awarded the contract in the first place is symptomatic of the chronic mismanagement we have come to expect. It was clear at the time of the award that Carillion were in serious trouble, so we were amazed that they won.
“We have no doubt there will be all the usual implausible scripted denials that this will not cause any problems, that plans are in place and ‘HS2 remains on time and on budget’, but anyone who thinks that losing a contractor on a project plagued by massive budget over-runs won’t lead to an increase in costs is deluding themselves, the same way that anyone who claims a project which is already two years behind schedule won’t slip further is in cloud cuckoo land.
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“This whole farce has swung the spotlight back on HS2, and as ever before this unwanted white elephant is in trouble. Hopefully this will remind politicians that there is still chance to cancel HS2 before even more taxpayers money is committed to this gravy train,” he added.
Responding, an HS2 spokesman said the news was disappointing for the firm but the two remaining companies – HS2 being a joint venture between Carillion, Kier and Eiffage – had provided assurances they would plug gaps left by Carillion. He added HS2 Ltd is discussing contingency plans with Kier and Eiffage.
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“HS2 Ltd does not hold a direct contract with Carillion. Work will continue as planned with no unnecessary or additional exposure to the taxpayer,” he said.
According to the department for transport (DfT) HS2 Ltd has carried out additional due diligence and sought reassurance Kier and Eiffage can still deliver.
Hampstead and Kilburn Tulip Siddiq MP said: “I am unsurprised by the latest case of recklessness to cloud this scheme. Ministers have long pushed ahead with a project that will demolish homes and create widespread destruction, in order to provide what will be out-of-date rail technology when it is finally finished.
“The awarding of a contract to Carillion, a firm that had issued dire profit warnings beforehand, fails to leave me too shocked despite the woeful misjudgement the decision clearly represents. Residents have been consistent in their opposition to HS2, and I am sure that the botching of major contracts associated with the scheme will do little to change opinion on this matter,” she added.
Hampstead lawyer Jessica Learmond-Criqui said it was devastating for the 20,000 employees faced with an uncertain future.
“But for north west Londoners who face 20 years of dust, pollution from thousands of lorries and disruption with the Euston to Old Oak Common branch of HS2, it gives some respite as this is bound to have a knock on effect on the planned works,” she said.
“Perhaps this will give the government pause for thought on this part of HS2 and perhaps also given current cost overruns and escalations to date, they may consider it worth saving some money and abandoning this part altogether, stopping HS2 at Old Oak Common.
“Given Carillion’s experience of over running their budget on projects, there are serious questions about the cost structure of their bids for projects and their cost projections. Before carrying on with HS2, the government must now conduct a thorough independent audit of HS2’s cost so that it is absolutely clear on the cost to the public purse before it starts,” she added.
Barnet and Camden London Assembly member Andrew Dismore said the DfT would have to act on HS2 quickly: “If not it will cast doubt on the whole of the contract which may or may not be a bad thing. I want to see HS2 go, but that won’t happen.”
Carillion is a key supplier to the Government and has contracts in rail, education and the NHS.
A Camden spokesman said the council was not aware it had any contracts affected by Carillion’s demise. UCLH and Whittington Hospitals said they had no Carillion deals.