Town hall chiefs have ‘contingency plan’ for major firm’s collapse

TOWN hall bosses say they have ‘contingency plans in place’ following the collapse of construction giant Carillion.

Rochdale council has an ongoing contract with Carillion to provide around £17m in facilities management. The contract also required them to build 12 new schools.

But Carillion, which employs 20,000 people across the country, has folded after crunch talks to drive down debt and shore up its balance sheet collapsed at the weekend.

A Rochdale council spokesperson said: “We have been in discussions with key organisations since late in 2017, following the profits warning issued by Carillion. We have been preparing for such a possibility through the development of contingency plans. We are working closely with relevant schools to make sure disruption is avoided and we welcome the reassurance offered by the government that public services will be protected. We recognise that this is a difficult and unsettling time for organisations working with the company and in particular for the employees of Carillion and offer our thanks for their continued commitment.”

Carillion, which has been struggling under £900m of debt and a £590m pension deficit, has seen its shares price plunge more than 70 per cent in the past six months. Chairman Philip Green said the government would provide funding to maintain public services carried on by Carillion staff, subcontractors and suppliers. But the firm is also a partner in a number of private schemes.

It’s also a key part of Greater Manchester’s business chain - with a domino affect on suppliers and construction firms, some of whom will be owed money, expected.

This could put both the firms and their employees in jeopardy.

Andrew Gwynne, shadow secretary for state for Communities and Local Government, has slammed the Government for awarding £2bn worth of contracts when Carillion was in trouble. He added: “The Government must offer urgent support to councils to ensure that staff have some certainty over their future and that contingency measures are immediately put in place to ensure the seamless provision of services.”

Minister for the Cabinet Office 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. It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.”