City region metro mayor Steve Rotheram said the liquidation of one of the country’s largest contractors “raises some very difficult questions around what happens to the many publically-funded contracts, including construction of the new Royal Liverpool Hospital and elements of HS2, that it will now be unable to honour”.
The construction giant Carillion, which was on site building the delayed £335m Royal Hospital amongst other North West projects, yesterday announced it was going into liquidation with £900m of debt.
Rotheram continued: “There is something fundamentally wrong when a company of this size, with a number of significant contracts awarded by national government, ends up in this position. We need to understand what went wrong and how to learn from it.
“There are also serious concerns over the future of all those people currently working for Carillion and around what will happen to its pension fund. As a matter of urgency the Government needs to provide clear answers to all these questions.”
Mayor of Liverpool, Joe Anderson, said: “Clearly when a company of this size fails there are wide repercussions and the receivers should do all in their power to avoid disruption to vital public services and protect Carillion’s workforce and limit the impacts on the company’s supply chain.
“Although the council has no direct ties with the company, it is clearly involved as a construction partner in the new Royal.
“The hospital’s management team has solid contingency plans in place to complete the project, however I wrote to the Health Secretary, Jeremy Hunt, last week before it became clear that Carillion was in trouble.
“I asked him for assurances there will be no further delays to the Royal’s opening and invited him to come up to Liverpool. I stand ready to help the Trust in lobbying the Department of Health to get the project over the line.”
Aidan Kehoe, chief executive at the Royal Liverpool NHS Trust said: “We want to reassure people that the new Royal will be built and the Hospital Company has a range of options and contingency plans that are being implemented, now that Carillion have gone into liquidation.
“The Hospital Company who are contracted to deliver the project is empowered to terminate existing contracts and engage a new contractor to complete construction. They also have access to insurance funds to enable it to complete the project.
“The Hospital Company is now enacting these plans and is in discussion with PwC and other interested parties. They are also arranging for a new company to be established that Facilities Management workers will be transferred to immediately to ensure work can continue and staff and suppliers can continue to be paid.”
PwC has been appointed to manage Carillion’s liquidation. In a statement on its website it urged all employees involved in public contracts to go into work today, and the Government reassured that they would still get paid. However, in the private sector, the Government has refused any bail-outs, and has said companies employing Carillion will get 48 hours of support, before choosing whether to lose a contract or pay for the costs of continuing.
Various joint venture partners and subcontractors have already revealed the extent of the damage the Carillion collapse has caused. Balfour Beatty and Galliford Try put out statements yesterday saying they would each take a £40m hit to their profits. Plant hire company Speedy Hire has said it is owed £2m, and piling engineer Van Elle is owed £1.6m.
Carillion is also the contractor on office scheme No8 First Street in Manchester, where completion was pushed back to spring 2018 after the cladding subcontractor went into administration. GVA represents the Greater Manchester Property Venture Fund which is developing the building, and issued a statement yesterday saying there was a “contingency plan” in place.
Carillion is also the contractor on Moday Living’s 36-storey residential tower Angel Gardens at Noma, and the University of Manchester’s £75m student accommodation project in Fallowfield.