Lifeline hope for projects as building giant fears collapse
DEVELOPERS are being sounded out to rescue major infrastructure projects across Scotland if leading construction firm Carillion collapses.
The firm is struggling under a £1.5 billion mountain of debt and plunging share prices, with lenders reportedly rejecting a proposed rescue plan.
With administrators now on standby, fears have been raised over the future of major Scottish infrastructure projects involving the construction giant.
These include a new £745 million Aberdeen bypass and plans to extend platforms at Edinburgh Waverley station to make way for longer electric trains.
It is understood the Scottish Government has put contingency plans in place to plug the gap if Carillion collapses, covering both its facilities management and construction services.
A source said it had “dipped the toe” and “had conversations” with alternative developers and service providers.
Carillion – the UK’s second-largest construction company – is engaged in crunch talks with the UK Government and the Pensions Regulator in an attempt to avoid going into administration.
Unions have urged Westminster to step in to protect 19,500 jobs now at risk, with Unite insisting “all possible options” must be considered – including bringing contracts in-house.
Scottish Labour’s shadow economy secretary, Jackie Baillie, called on the Scottish Government to clarify the potential impact if Carillion collapses.
She said: “Carillion is a firm which has been awarded multi-million pound public contracts and if it was to fail, could cause a huge crisis.”
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said it was likely the Scottish and UK Governments had been working on contingency plans since financial difficulties at Carillion first became clear last year.
He said it was a “pretty messy situation”, adding: “The situation is pretty bleak. You can see on the one hand, it’s in everybody’s best interest Carillion continues, but it’s difficult to chart a way forward.”
A Transport Scotland spokesman insisted Carillion had “no intention of withdrawing”
It is in everybody’s best interest Carillion continues
from the Aberdeen bypass project and that “they too remain committed to completing it in accordance with the contract”.
A Scottish Government spokesman said: “We continue to liaise with UK Government colleagues to monitor and mitigate service risks associated with Carillion’s financial situation and stand ready to offer what assistance we can at this anxious time for the company’s employees.”
The UK Government said a ministerial meeting to discuss the crisis took place on Thursday, with a spokeswoman adding: “We are carefully monitoring the situation while working to ensure our contingency plans are robust.”
Carillion said “constructive discussions with a range of financial and other stakeholders” were continuing.