Carillion collapse fuels fears for Northern Ireland jobs: No Executive means little help for staff, says MLA
Carillion key supplier to government - absence of institutions making help difficult
Carillion's collapses into liquidation has sparked fears for over 200 jobs in Northern Ireland as well as for its suppliers.
And an MLA has said the lack of an Executive is hampering any local help being offered to its Northern Ireland workforce.
The construction giant has said it has “no choice but to take steps to enter into compulsory liquidation with immediate effect” after talks over the weekend failed to find another way to deal with the company’s debts.
It is a major contractor for the Housing Executive, NI Power and has contracts in the Republic. The UK Government has warned of a "cost to the taxpayer" over the collapse.
Carillion is responsible for the heating of 38,000 Housing Executive properties, and the building maintenance for 22,000.
In January the Belfast Telegraph revealed the firm was trying to sell off tens of millions of pounds in Northern Ireland Housing Executive contracts along with the rest of its business across Ireland.
Documents seen by this newspaper, showed the company had prepared a deal for companies to take on all the current Housing Executive contracts. The work, worth around £35m each year, could be valued at more than £400m if some deals are extended as far as 2042.
Consultancy firm EY as part of its "project Lion" has approached suitable businesses to take on the contracts in Northern Ireland.
Investment documents show the deal between Carillion and its maintenance customers, of which the Housing Executive is the largest, involve "long-standing client relationships with majority of £35m+ per annum contracts secured through 2020 and beyond".
The contracts involve around 230 engineers and "service providers" to deliver the work.
Just last month, the Housing Executive announced £336m contracts with three firms, including Carillion, for maintenance deals.
Unions are calling for urgent reassurances over the jobs, pay and pensions of thousands of workers following the “disastrous” news.
The Housing Executive, in a statement said: “The Housing Executive is continuing to monitor the situation closely and will implement contingency arrangements regarding our maintenance and heating services as soon as required. We will provide a further update in due course.”
The Department of Economy was also approached for comment.
The absence of institutions makes it difficult for any acute intervention. Patsy McGlone
Chair of the All-Party Group on Construction Patsy McGlone MLA said the collapse will have a significant blow on local workers and the local construction industry.
Mr McGlone said: “Workers based here will be waking up to the worst possible news just after Christmas. Staff will continue to be paid while the liquidation process proceeds but this is a bleak situation for those involved.
“It will also pose significant issues for related suppliers who may have ongoing contracts with Carillion for materials. Through the All Party Group on Construction, I will be raising this with key stakeholders.
“The absence of institutions makes it difficult for any acute intervention here but I’m seeking urgent meetings with those involved and with the Housing Executive to ensure that workers and public service users are protected and supported.
"It was clear that there was a serious problem and yet the British Government’s response was to carry on granting significant contracts with little perceivable intervention on behalf of workers."
Carillion which employs 20,000 workers across the UK, said crunch talks over the weekend aimed at driving down debt and shoring up its balance sheet had failed to result in the “short term financial support” it needed to continue trading while a deal was reached.
The infrastructure specialist, which has been struggling under £900million of debt and a £590m pension deficit, 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.
Breaking news saying Carillion have gone into liquidation. It is VITAL for govt to ensure the firm's public service contracts, employees and public money are protected first. The govt need to outline the contingency plan they promised in the House, when I question them on weds.— Jon Trickett (@jon_trickett) January 15, 2018
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.
“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.
“In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.
“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.”
The company 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.
As a result, the Government has been under increasing pressure to intervene to prevent the collapse of the company.
Officials from several unions representing workers on the railways, construction sites, prisons, hospitals and schools are seeking information from the company and ministers.
Rail, Maritime and Transport union General Secretary Mick Cash said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain.
“We have been warning since Thursday night that we thought the collapse of the company was imminent.
“The blame for this lies squarely with the Government who are obsessed with out-sourcing key works to these high risk, private enterprises.
“RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members jobs and pensions.
“The infrastructure and support works must be immediately taken in house with the workforce protected.
“Transport Secretary Chris Grayling and his Tory colleagues must be forced to take responsibility for this crisis which is wholly of their making.”
Carillion had met with lenders HSBC, Barclays, Santander and Royal Bank of Scotland on Wednesday to discuss options for reducing debts, recapitalise or restructure the group’s balance sheet.
It was followed by a meeting on Friday between the Government, pension authorities and stakeholders in an attempt to thrash out a rescue package for the firm.
A petition launched over the weekend calling for Carillion to be nationalised had attracted more than 1,200 signatures.
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