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Business

Carillion collapse into liquidation leaves future of Kent works in doubt

By: Chris Price

Published: 09:15, 15 January 2018

Updated: 09:15, 15 January 2018

The construction and outsourcing giant Carillion has plunged into liquidation, putting major works across Kent in doubt.

The company, which was awarded the contract for HS2, announced this morning that crisis talks with creditors over the weekend to restructure its £1.5 billion debts had failed.

It employs 43,000 people worldwide, including 20,000 in the UK.

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Carillion is going into liquidation

Apprentices at its training centre in Sittingbourne – where it teaches carpentry, bricklaying, painting and decorating – were told to go home after arriving this morning.

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Scott Edwards from Gillingham tweeted: “Dropped son at training centre in Sittingbourne, not one leader took ownership / responsibly to talk to the trainees #justgohome #anger”.

The liquidation has prompted criticism that the government continued to hand out contracts to Carillion despite the business issuing three profit warnings since July.

Ministers said the government will continue to deliver all public sector services it had contracted to the company and told all staff to come to work as normal.

The insolvency raises questions about the future of the so-called Richborough Connection works.

In a joint venture with Eltel Networks, Carillion had been awarded a £38 million contract in 2016 to build a power line between National Grid substations in Canterbury and Richborough.

The standard pylon that will be used in the Richborough Connection project

A National Grid spokesman said: "National Grid has contingency plans in place for all its projects with Carillion, using alternative suppliers if necessary.

"We believe that these plans mean we will be able to keep any disruption to a minimum.”

In April last year, as part of a joint venture, it was awarded a contract worth more than £200 million over five years to manage catering and accomodation facilities at 87 key defence sites across Kent, Sussex, Surrey, Berkshire and London, employing 1,800 people.

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In 2015, it signed a five-year contract also worth about £200 million with the Ministry of Justice to manage the facilities at about 50 prisons, including sites in Kent.

Carillion was responsible for the construction of Darent Valley Hospital in Dartford, one of the first to be built under a PFI contract awarded in 1997.

PFI deals mean private sector companies take the risk of building major public buildings but then recoup their investment by running its facilities afterwards, such as hospital car parks and cleaning services.

Darent Valley Hospital in Dartford was built by Carillion

Dartford and Gravesham NHS Trust spokesman Sue Daniels said: “In common with a number of NHS trusts, we use Carillion PLC to provide some services at Darent Valley Hospital, such as maintenance, catering, portering, cleaning and security.

“We have extensive contingency plans for dealing with this issue and making sure that services to patients continue to be provided safely and to a high standard.

“All of our facilities remain open as normal, and patient appointments are unaffected.

“We know this will be an unsettling time for staff and we thank them for the hard and important work that they do on behalf of our patients. We’ll be speaking directly to them through their line management structure.”

Carillion’s failure has led to some calls to bring its work back into public ownership.

Tim Roache, general secretary of the GMB union, said it is “the only way to safeguard the jobs and services this mess has put at risk”.

He said: “Merely propping up this botched shell of a company is not a secure or stable solution for our public services. It’s high time we brought this vital work back in house.”

Previous work done by Carillion in Kent has included the construction of the Spires Academy in Canterbury, the Marsh Academy in New Romney and the New Line Learning Academy in Maidstone.

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

Its 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 [interim chief executive] 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.”

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