Carillion’s collapse leaves thousands of employees jobless

carillion

Carillion’s collapse leaves thousands of employees jobless

The UK’s second biggest construction company, Carillion, has gone into liquidation. Carillion, the Government and its lenders have failed to reach a deal to save the company. The construction company’s failure is due to piling up huge amounts of debt, worth around £1.5 billion and also losing money on large contracts. The Wolverhampton-based company employs 43,000 staff worldwide, 20,000 of these being in the UK. The Government will now provide funding to maintain the public services ran by Carillion.

 

Government Minister, David Lidington, has announced: “All employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do”.

 

Carillion is the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence. The company is also involved in major projects such as the HS2 high-speed rail line, as well as managing schools and prisons.

 

The Shadow Minister for the Cabinet Office, Jon Trickett, has said: “Given “£2 billion worth of Government contracts were awarded in the time three profit warnings were given by Carillion, a serious investigation needs to be launched into the Government’s handling of this matter”.

 

Labour and the Unite union have called for an urgent enquiry into the collapse, to investigate why the Government didn’t act earlier when the warning signs first became clear that the organisation was struggling. Job losses could have been avoided if the Government had acted quickly.

 

However, it is believed the Government has been helping out Carillion for a long period of time. They awarded the firm with contracts when they knew the company was in trouble. The Government constructed the HS2 contracts, so that joint venture partners of Carillion could take on the work if the firm went bust. The Government hoped the new contracts would help to ensure Carillion’s lenders felt reassured.

 

BBC Business Editor, Simon Jack, has stated: “Some of Carillion’s contracts will be taken on by other firms and some could be renationalised”.

 

There are thousands of smaller businesses who carry out work for Carillion, who are wondering whether they’ll be paid or not. One firm, which provides services for Carillion’s prison contract has said they may fail if they aren’t paid the £80,000 owed to them.

 

The Government has said staff members who worked for Carillion inside private sector companies will have their wages stopped on Wednesday 17th January unless other firms rescue their jobs. Carillion could have helped their thousands of employees out by telling them the company was going into liquidation a lot earlier than they have done. This would have helped prepare them to secure another job.

 

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