The Courier & Advertiser (Perth and Perthshire Edition)
Carillion crash puts 20,000 jobs at risk
Fears for Scottish workers after £900 million in debt construction giant enters compulsory liquidation
There are fears for Scottish jobs after construction giant Carillion entered into compulsory liquidation.
Talks were held throughout the weekend between government ministers and company officials in a bid to keep Carillion in business, but they broke up on Sunday evening without a deal.
The stricken firm, which employs 20,000 workers across Britain, has been struggling under £900 million of debt and a £590m pension deficit.
It has seen its shares price plunge more than 70% in the past six months after making a string of profit warnings and breaching its financial covenants.
Its contracts in Scotland include the Aberdeen Western Peripheral Route (AWPR), Registers of Scotland, the Scottish Children’s Reporter Administration, West of Scotland Housing Association and NHS Greater Glasgow and Clyde.
Network Rail awarded Carillion a contract last year to deliver platform extension works.
The Scottish Government said it expects work on the AWPR to continue and is holding discussions about other contracts.
Economy Secretary Keith Brown said: “The Scottish Government has been working to manage or eliminate risks associated with Carillion’s difficulties since July last year and we have contingency plans in place for affected contracts, including the AWPR, where the contract contains a mechanism for the remaining two joint venture partners to deliver the project, and we expect that work to continue.
“I have spoken to the Secretary of State for Scotland this morning and my officials have also spoken with PwC to establish the situation and should it be necessary we stand ready to support for any affected employees through our Partnership Action for Continuing Employment (PACE) initiative which aims to minimise the time individuals affected by redundancy are out of work.”
Network Rail said it is activating its contingency plans as a result of the news.
The Scottish Building Federation (SBF) said the Scottish Government should ensure lessons are learned for future decisions on the procurement of large-scale construction projects.
SBF president Stephen Kemp, managing director of Orkney Builders, said: “As a trade federation, we have long argued that the bundling of contracts into huge frameworks that only the very biggest companies can bid for is not only detrimental for small and medium-sized enterprise contractors that are unable to compete – it also creates big risks for government when something like this happens.”
Unite’s Scottish secretary Pat Rafferty said: “Given today’s drastic events, it’s clear that Carillion was legally obliged to give notice to the workforce in December of the possibility of redundancies.
“It hasn’t done that. So, Unite is taking advice about legal action to secure the pay and pension rights of our members.”
Meanwhile, it emerged that small firms were still waiting for Carillion to pay bills going back several months.
Mike Cherry, chairman of the Federation of Small Businesses, said: “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees.”
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.
Shares in Britain’s second biggest construction firm have been suspended on the London market following the liquidation announcement.
Carillion 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.”
Retirees already receiving their pensions will continue to receive payments, the Government has assured.
But there are around 27,000 staff involved in Carillion’s defined benefit schemes which are likely to be transferred to the public Pension Protection Fund.