Carillion was given public contracts despite profit warnings
QUESTIONS have been raised over the continued awarding of public contracts to struggling construction giant Carillion – despite multiple profit warnings.
The UK’s second-largest construction company is struggling under a £1.5 billion mountain of debt and plunging share price, with fears it could collapse.
The firm is a major contractor involved in a range of key projects such as the new £745 million Aberdeen bypass and the UK Government’s flagship HS2 rail line.
Despite issuing three profit warnings in the last six months, the UK Government awarded three separate contracts to Carillion over that period, worth nearly £2bn in total.
It comes amid claims hundreds of workers on the Aberdeen bypass – a contract awarded by Transport Scotland in 2014 – had Christmas bonus payments withdrawn.
Unite Scotland raised fears the move was linked to Carillion’s financial difficulties.
Meanwhile, Labour voiced concern over the UK Government’s due diligence, saying it was government policy to designate a company as “high risk” if a profit warning has been issued.
Shadow cabinet office minister Jon Trickett MP added: “Alarm bells have been ringing for over six months about the state of Carillion’s finances, so the Government must answer questions on exactly what due diligence measures were undertaken before awarding contracts to Carillion worth billions of taxpayers’ money.”
Unite said that hundreds of agency workers employed on the Aberdeen bypass project were told they would not receive subsistence payments the week before Christmas.
The payments – equal to around £36 a night – help employees keep their lodgings over the festive holidays, meaning they don’t have to seek out
new accommodation when they return to work.
John Clark, of Unite Scotland, said the cash had been provided for the last two years, but workers were told they would not receive it this year, with no explanation given.
He said: “Today’s news makes you wonder if that happened because Carillion could no longer write the cheques.”
Michael Russell MSP insisted work on the Aberdeen bypass would continue irrespective of what happened to Carillion.
He told the BBC’s Sunday Politics Scotland: “We understand that that work is secure and obviously that’s of great importance.”
Conservative Party chairman Brandon Lewis said crunch talks were taking with officials.
A Transport Scotland spokesman said any impact on the Aberdeen bypass would be “mitigated” because Carillion’s construction partners “remain fully responsible for the completion of the works”.
He added: “It is standard practice for the subsistence costs of subcontractors and agency workers to be paid only for the periods when they are working away from home. The terms and conditions of each individual’s subsistence are a private matter between themselves and their employer.”
Carillion said it would not be appropriate to respond to the payment claims independently, as the Aberdeen bypass is being delivered by a consortium composed of Balfour Beatty, Galliford Try and Carillion. The joint venture team could not be reached for comment.