Tunnel costs spiralling
£700,000 PAID TO FIRM BROUGHT DOWN BY CARILLION
Reporter ALMOST £700,000 was paid to a firm working on the Tyne Pedestrian and Cyclist Tunnels before it went bust.
Vaughan Engineering Limited was brought in to work on the longrunning and much-troubled refurbishment project last year.
But the Scottish company was left exposed by the collapse of Carillion and was sent tumbling into administration, forcing it to leave the project.
Vaughan Engineering had been owed £600,000 by the construction giant and was expecting another £1.1m worth of work from it.
Its collapse contributed to a succession of setbacks to the refurbishment which have seen the reopening delayed repeatedly and the budget spiral to almost £10m over initial estimates.
The North East Combined Authority (NECA) confirmed the budget has reached £15,657,198, up from the £6m originally envisioned when work started in 2013.
The authority is now in talks with Vaughan Engineering’s administrators about recovering some of the funds.
According to NECA documents, the first payment to the company – a sum of £42,954.09 – was made on July 24.
The last – and largest – was made on March 15 and totalled £148,462.10.
In total, Vaughan Engineering was paid £696,806.74 by NECA.
It is understood that, while NECA is in discussion with the administrators, it believes the sum of public money actually lost is not substantial because of the staggered nature of the payments to the company.
Project bosses have previously admitted the reopening date of late autumn 2018 was put under pressure by the development but as of yet it has not been moved.
Newcastle City Council has since taken the works due to be carried out by Vaughan Engineering inhouse on behalf of NECA and work is continuing on the site.
A council spokesperson said: “It was regrettable that Vaughan Engineering Ltd went into administration in March and since then we have been working closely with the administrators as part of this process.
“In order to minimise any further delays or costs to refurbishment works to the pedestrian tunnels, our own staff stepped in to progress the work of Vaughan.
“Our team was on site quickly and there has been a smooth transition with them taking over this aspect of the project.
“This is a complex engineering project we are managing on behalf of the North East Combined Authority, and we are determined to ensure it is completed to the highest standards.”
Vaughan Engineering had been working on several Carillion projects, including the Vaux site in Sunderland.
When the risk of administration first became clear in March, the firm’s finance director, Gavin Vaughan, said: “This is devastating news for all of the people who work for Vaughan Engineering.
“We are a family-owned firm, working in England and Scotland for the last 50 years.
“This is a terrible blow not just for all of the individuals and their families but also for the local economy.”
Carillion directors were criticised in a report by the Works and Pensions and Business Select Committees, who accused them of being too busy “stuffing their mouths with gold” to deal with the company’s issues.
Vaughan Engineering was not the first contractor involved with the Tyne Pedestrian and Cyclist Tunnels to have problems.
The original lead contractor, GB Building Solutions, went into administration in March 2015 and another contractor was dismissed from the project earlier this year.