Published: Tue, January 16, 2018
Worldwide | By Gretchen Simon

Construction firm involved in HS2 collapses

Construction firm involved in HS2 collapses

Unions are wanting urgent reassurances for thousands of workers following the announcement this morning.

Its failure means the government will have to provide funding to maintain the public services run by Carillion.

The Housing Executive has warned of disruption to services following the collapse of its contractor Carillion. The company is in a joint venture with Carillion on three projects: the Aberdeen Western Peripheral Route, the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.

Although they are central to many key projects and services, like building new schools, they often don't associate themselves with the work because they subcontract to construction or managed services firms.

Carillion, which has a variety of private and public service contracts in britain and employs 43,000 staff worldwide, announced its immediate liquidation Monday after the heavily-indebted company failed to secure a last-ditch financial rescue from the government and banks.

"The priority now for the Government and administrators is making sure kids in schools still get fed - and our members still have jobs and pensions. What is unfolding at Carillion must never be allowed to happen again".

By this past weekend, the company had £900 million ($1.2 billion) in debt and a £587 million ($808 million) pension deficit.

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Unions have also asked why the group continued to receive government contracts despite issuing a number of profit warnings.

Carillion, which has been in discussions with stakeholders and creditors for almost a week, said these were continuing as it battles for survival following several profit warnings and a first-half loss of more than GBP1 billion ($A2.0 billion).

Carillion contracts include major undertakings like high speed rail project HS2, Network Rail and hospital projects like the Midland Metropolitan Hospital and Royal Liverpool Hospital.

"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", said Mike Cherry, the FSB national chairman.

"We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers".

David Lidington, a minister for the Cabinet Office, which supports the government and the prime minister, said there were plans to bring some of the public services provided by the company in-house, while others would be given to other contractors. There is growing alarm that much of this money will be lost leaving many more firms at risk of financial collapse.

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