Carillion insolvency raises job fears

Construction giant Carillion has declared insolvency, threatening thousands of jobs.

The move came after talks between the firm, its lenders and the government failed to reach a deal to save the UK’s second biggest construction company.

Carillion ran into trouble after losing money on big deals and running up huge debts. Its failure means the government will have to provide funding to maintain the public services run by Carillion.

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

The company has 43,000 staff worldwide, 20,000 in the UK. It is not clear yet how those staff will be effected.

The government has since announced that it will continue to deliver all public sector services following the insolvency of Carillion PLC.

David Lidington, government minister, said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.

“Since profit warnings were first issued in July, the government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business. We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality. It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.

“We understand that some members of the public will be concerned by recent news reports. For clarity – 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.

“Since its inception in the 1990s private finance has helped to deliver around £60 billion of much-needed capital investment in infrastructure in the UK across a range of projects and we will continue to maintain partnerships with responsible firms in future.”