Construction behemoth Carillion have given the shock announcement that they are to go into liquidation, putting thousands of jobs at risk.
Little is known about the details as yet, but according to the statement talks between the firm, lenders and government failed to reach an adequate solution for saving the second biggest construction company in the UK.
The company employs a total of 43,000 people around the world – 20,000 of which are located in the UK. It is not yet clear how these people will be affected, however, government have stated that they will continue to provide funding in order to maintain public services currently run by Carillion.
News of the liquidation will undoubtedly come as a shock to construction professionals, who in recent years have seen the firm involved in major projects such as HS2 and the delivery of schools and prisons. They are also the second biggest supplier of maintenance services to Network Rail, and they maintain 50,000 homes for the Ministry of Defence.
Where did it all go wrong?
In a BBC article, Carillion 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.
“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.”
Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, added “This really shakes public confidence in the ability of the private sector to deliver public services and infrastructure.”
“There needs to be a change in the mindset of many of many of these companies… if you’re actually doing a very substantial amount of business at taxpayers expense for the taxpayer, you’ve got to treat yourself much more as a brand of the public service not as a private company just there to enrich the shareholders and the directors.”
“Ironically, Whitehall tends to do contracts with companies that it always does contracts with, because that’s the safe thing to do – that’s the perception. A great many small and medium-sized companies feel excluded.”
Mick Cash, the general secretary of the Rail, Maritime and Transport (RMT) union, concluded “This is disastrous news for the workforce and disastrous news for transport and public services in Britain.
“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.”
According to BBC business editor Simon Jack, some of Carillion’s contracts will now be taken on by other firms whilst others could be renationalised once again.
More to follow.