Staff and rail work in limbo after Carillion's collapse

It is all stop at Carillion after the debt-laden company went into liquidation
It is all stop at Carillion after the debt-laden company went into liquidation

Thousands of employees across Lancashire have been left in limbo along with rail electrification work in the wake of the Carillion crisis.

The industry giant is in liquidation after failing to get finance to cope with its £900m debt and £590m pension deficit.

Locally it was responsible for services ,contracts and some station improvements for train operator Northern, some of the electrification upgrades to the lines for Network Rail and was due to take up service contracts at Weeton and Fulwood barracks for the MOD.

The Government, which has come under heavy fire for its handling of the situation, urged staff to keep going to work and said “those already receiving their pensions will continue to receive payment”.

The company, which employs 20,000 across Britain, said crunch talks over the weekend aimed at shoring up its balance sheet had failed to result in the “short-term financial support” it needed to continue trading.

It had seen its shares price plunge 70 per cent in the past six months after a string of profit warnings and breaching its financial covenants.

Its collapse poses questions as to why the group continued to receive Government contracts despite issuing a number of profit warnings.

While the electrification upgrade to the Blackpool to Preston line is being done for Network Rail by Volker, the work from Preston to Manchester was handled by Carillion staff.

Network Rail said the work was continuing, although shifts worked by Carillion staff were temporarily suspended until new arrangements could be made.

Martin Frobisher, managing director for Network Rail’s London North Western route, said: “While the full impacts will become clear in the coming weeks, Network Rail has committed to work with the official receiver as we continue to upgrade the Manchester-Preston line.”

Carillion, Britain’s second biggest construction firm, had public sector or public/private partnership contracts worth £1.7bn, including school dinners, cleaning and catering at NHS hospitals.

A Northern spokesman said it had Carillion staff in its customer contact centre and at stations doing maintenance and cleaning.

He said: “Those teams are working normally today, answering customer calls and cleaning stations, and we are very thankful for their efforts in exceptional and difficult circumstances. Our first priority is to ensure that we continue to provide these services to our customers, and we are looking at all options to ensure that happens.

County Council leader Geoff Driver said an agreement in 2013 with Carillion saw it assist in disposing of surplus property but no ongoing sales were at risk and there were no other contracts. Both Blackpool and Wyre councils too confirmed that they had no contracts with Carillion.

Blackpool South Labour MP Gordon Marsden said the Conservatives had been too obsessed with Brexit and had continued to give contracts to the firm, which had been one of their party donors, when warning signs were in place.

He said: “The Government has failed comprehensively to keep an eye on a worsening situation at Carillion. This now means dozens of public service contracts, and hundreds of jobs and apprenticeships are at risk.

“Without the ability to continue progress on the electrification down to Manchester we will not be in anywhere near as good as a position as we should be on our rail links. The majority of apprenticeships currently under threat are for 16 to 18-year-olds. These are precisely the sort of apprenticeships that young people here in Blackpool would rely on to improve chance of getting better jobs.”

He said Carillion was the country’s biggest apprenticeships provider for that age group and the Government must step in to safeguard them.

But Blackpool North and Cleveleys Conservative MP Paul Maynard said: "In a statement to the House, Cabinet Office Minister David Lidington made it clear the priority is to ensure the continued delivery of public services and to provide support for Carillion staff, its sub contractors and suppliers.

"The Government has offered protection to those employed on public service contracts and has already arranged for specialist support to those employed by Carillion in other areas.

“In this case the shareholders and lenders should bear the brunt of the company’s losses. Taxpayers should not bail out the private sector or reward failure. It was made clear in the House that the losses at Carillion are not connected with its Government contracts.”