UK Prepares Contingency Plans for Public Carillion Projects

Dianna Christensen
January 14, 2018

The fate of the builder is sensitive for the government because Carillion has contracts with several departments, with projects ranging from hospitals and libraries to roads and the HS2 high-speed rail link.

It has previously been reported that EY is on standby for an administration.

Unite assistant general secretary Gail Cartmail, said: "The Government must consider all options while the future of Carillion hangs in the balance, including bringing contracts back in-house".

"If the Government is forced to institute a rescue package they need to also ensure that the supply chain is fully protected as many of these workers lack even the protection of basic employment rights, as they are employed on a bogus self-employed basis, through agencies and via umbrella companies".

"The Government can't just do a financial bailout".

The Wolverhampton-based group is the second-largest supplier to Network Rail and maintains approximately half of the UK's prisons as well as roughly 50,000 homes for the Ministry of Defence.

Adding to the pressure on the small cap firm - which issued three profit warnings in less than six months past year and has seen its market value collapse by 90% - was a recommendation from broker Peel Hunt to sell the stock ahead of forthcoming newsflow.

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 previous year.

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Carillion has struggled since reporting half-year losses of £1.15 billion and a meeting was held on Friday to discuss its pensions deficit.

"You can see that one the one hand, it's in everybody's best interest that Carillion continues, but at the same time it's hard to chart a way forward". It also has contracts in many other industrial sectors.

As well as employing 19,500 people in the United Kingdom, it is one of the government's biggest contractors.

Carillion declined to comment on Sky News' report.

A spokesperson for the Pensions Regulator said the organisation remained "closely involved" in discussions with Carillion and the trustees of its pension schemes.

The Guardian's website reported shadow business secretary, Rebecca Long-Bailey, as saying: "The collapse of Carillion could provoke a serious crisis".

The PPF, which would take on responsibility for paying pensions to thousands of current and former Carillion workers if it collapses, said: "The PPF is aware of the discussions between the company, Government and banks and, along with the Trustees and the Pensions Regulator, will act as it always does to protect the interests of Carillon scheme members and levy payers".

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