Carillion

Economy secretary assures parliament over jobs and future of AWPR

Keith Brown on a visit to the AWPR site last year

Cabinet secretary for the economy, jobs and fair work, Keith Brown, has moved to reassure MSPs that disruption and job losses caused by Carillion’s collapse would be minimised in Scotland, though the minister stopped short of giving an opening date for the Aberdeen Western Peripheral Route (AWPR).

The UK’s second-biggest builder entered liquidation on Monday after racking up debt and pensions burdens of around £1.5 billion.

The firm formed one-third of the Aberdeen Roads Ltd (ARL) consortium leading the £745 million AWPR work alongside Balfour Beatty and Galliford Try.

In a topical question at Holyrood, Aberdeenshire East MSP Gillian Martin raised concern for jobs dependent upon the project and also the knock-on effect on smaller companies in the supply chain in the North East and throughout Scotland.

In response, Mr Brown said that support is available to any workers who may be concerned for their jobs, with help and advice to be made available to subcontractors through a designated Scottish Enterprise helpline.

Furthermore, the cabinet secretary assured parliament over the contract to deliver the AWPR scheme with the other firms involved in the consortium making clear that they will fulfil their contract obligations and had “very quickly” notified the London Stock Exchange of their intention. Mr Brown confirmed that Transport Scotland will support and work with them throughout this process.

The economy secretary said he was unable to give a “cast-iron guarantee” that jobs would not be lost as a result of the liquidation of the company, but said there was a “good chance” employees would continue to work on existing projects.

When asked about the future of Carillion employees working on the bypass, Mr Brown said: “I think it is likely that the two remaining contractors will require work to be done that was previously done by the employees of Carillion.

“I don’t want to be too definitive, but there’s around 70-plus employees, direct employees of Carillion, employed on that contract plus 190 employed on other terms, including some agency staff.

“We can’t give a cast iron guarantee on the workers but I think there is a good chance that many of those will be reemployed and for those that are not we have offered the assistance I have previously mentioned.”

On the day of Carillion’s collapse, the joint venture firms indicated that the announcement leaves a financial hole of £40-80m in the AWPR project.

Galliford Try said: “The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract.  Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80m, of which any shortfall will be funded equally between the joint venture members. The companies will discuss the position urgently with the official receiver of Carillion and Transport Scotland, to minimise any impact on the project.”

Mr Brown had said the Scottish Government’s Partnership Action for Continuing Employment (PACE), which helps people facing redundancy, would be available for those under threat.

He said PACE would also be available if anyone should lose defence jobs.

Gillian Martin MSP said: “Our first thoughts when businesses face such serious difficulties should always be for those who may be facing uncertainty over their jobs and their future, and it was encouraging to see parliament united in support of them today.

“I am grateful to the cabinet secretary for the support being made available both to Carillion employees and to subcontractors who may have concerns at this time.

“Early confirmation from the other partners in the Aberdeen Roads consortium that they intend to press ahead and deliver the AWPR contract will be hugely reassuring for my constituents. I know people and businesses across the North East are looking forward to the opening of the much-needed £750 million new route this year, and I will be engaging with the Scottish Government and Transport Scotland going forward to ensure that remains on schedule.”

Meanwhile, the Scottish  Government has set up helplines for anyone who may be affected by the failure of the construction firm.

Scottish companies affected by the Carillion insolvency can call Scottish Enterprise on 0300 013 3385 or register their details here.

The redundancy helpline operated by Skills Development Scotland is 0800 917 8000, with help also available here.

It was also announced today that banks and government were working together to mitigate the effects of Carillion’s collapse on businesses within the supply chain.

Carillion faces legal action over workers’ pay and pension rights

The Unite union is set to take legal action against Carillion after claiming that the collapsed construction and support services firm breached its legal obligations to give notice of redundancies.

The company, which employs 20,000 people in the UK including thousands in Scotland, was placed into compulsory liquidation yesterday morning with debts of £1.15 billion and a pension shortfall of over half a billion after talks with the UK government to save the company were unsuccessful.

Unite Scotland pointed to current labour laws, which say employers with a workforce of more than 20 at one location are legally obliged to give employees 30 days’ notice of possible redundancies.

Carillion had been involved in the £745 million Aberdeen Western Peripheral Route (AWPR) and had contracts with Registers of Scotland, the Scottish Children’s Reporter AdministrationWest of Scotland Housing Association and NHS Greater Glasgow and Clyde among many others.

Network Rail awarded Carillion a contract last year to deliver platform extension works and the firm is also responsible for two facilities management contracts worth £158m with the Ministry of Defence (MoD) which cover 83 military sites in Scotland.

In the last six months, the company issued three profit warnings and yet in that time was awarded contracts worth more than £2bn by the UK government.

Unite’s Scottish secretary Pat Rafferty said: “Given (yesterday’s) drastic events it’s clear that Carillion was legally obliged to give notice to the workforce in December of the possibility of redundancies.

“It hasn’t done that. So Unite is taking advice about legal action to secure the pay and pension rights of our members.

“Obviously saving jobs is the priority but we also have to make sure that workers don’t pay the price for what is boardroom greed and recklessness.”

Unite Scotland said that the collapse of Carillion should be a stark warning about the obsessions across the UK, in Westminster, Holyrood, and local government about the privatisation of public services.

The union believes that for a long time putting public services out to private tender has “started an undercutting merry go round” which may have affected Carillion. According to Unite, the company has lost hundreds of millions because major contracts turned out to be loss-makers after tender bids were perilously low.

Pat Rafferty added: “This is what happens after years of worship at the Holy Grail of privatisation. It starts with the mistaken belief that private provision is best and ends with the tax payer picking up a billion pound tab when reality proves that is not true. There needs to be a government inquiry to establish just what went wrong at Carillion so that lessons can be learned. Meantime the administrators have to determine what contracts held by Carillion can be brought into public control.”

Unite has welcomed the fact that the government and the administrators PwC have to date given guarantees about financial support for the continuation and completion of public contracts formally held by Carillion.

The Scottish Government has confirmed it is in talks with UK counterparts and liquidators to work out how best to support Carillion employees and contracts.

Housing association planning to transfer Carillion repairs deal to new contractor

West of Scotland Housing Association (WSHA) is working to transfer its repairs and maintenance work to a new contractor following the demise of Carillion.

The construction and support services business, which was placed into compulsory liquidation yesterday morning, had been providing facilities management services for WSHA since it was appointed last August.

The contract saw Carillion deliver WSHA’s planned maintenance programme, installing new kitchens, bathrooms and heating systems in tenant’s homes.

Following yesterday’s announcement, West of Scotland Housing Association told our sister publication Scottish Housing News: “West of Scotland Housing Association has been working with Carillion PLC over several months to transfer the day to day repairs and planned maintenance contracts to Robertson FM.

“We want to assure our tenants and owners that we are working towards a smooth transfer of services which will mean they will not be adversely affected by the recent announcement made by Carillion.”

The UK’s second largest construction company, Carillion had been in emergency financing talks with its lenders and the banks since last week after suffering from debts of £1.15 billion and a pension shortfall of over half a billion.

Its current Scottish projects include the extension of platforms at Edinburgh Waverley station and the new £745 million Aberdeen bypass.

The firm is also responsible for two facilities management contracts with the Ministry of Defence (MoD) worth £158m which cover 83 military sites in Scotland.

Carillion goes into liquidation after rescue talks with lenders fail

Construction and support services business Carillion was placed into compulsory liquidation this morning after talks with the UK government to save the company were unsuccessful.

The UK’s second largest construction company, which had been in emergency financing talks with its lenders and the banks since last week, employs 20,000 people in the UK, has debts of £1.15 billion and a pension shortfall of over half a billion.

Its current Scottish projects include the extension of platforms at Edinburgh Waverley station and the new £745 million Aberdeen bypass.

The firm is also responsible for two facilities management contracts with the Ministry of Defence (MoD) worth £158m which cover 83 military sites in Scotland and was responsible for providing the day-to-day repairs for West of Scotland Housing Association (WSHA).

A key supplier to the UK government with high-tariff contracts within the HS2 and Crossrail projects, Carillion also has contracts in the rail industry, education and NHS.

Philip Green, chairman of Carillion, 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.

“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

“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.

“We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”

“It is regrettable… but taxpayers cannot be expected to bail out a private company.”

David Lidington MP

The announcement follows a troubled period for the contractor which delivered a massive profit warning in July last year and the removal of Richard Howson as its chief executive.

In November it revealed that it expects to breach its financial covenants by the end of December and that full-year profits will be “materially lower” than current expectations.

And just this month the Financial Conduct Authority (FCA) revealed it was investigating “the timeliness and content of announcements made by Carillion between 7 December 2016 and 10 July 2017”.

An application was made to the High Court for a compulsory liquidation of Carillion before opening of business today.

An order has been granted to appoint the Official Receiver as the liquidator of Carillion.

The Official Receiver will make an application to the High Court for PricewaterhouseCoopers LLP (PWC) to be appointed as Special Managers, to act on behalf of the Official Receiver.

The UK government is expected to step in with funding to ensure Carillion’s public services contracts continue.

MP David Lidington, Minister for the Cabinet Office and Chancellor for the Duchy of Lancaster, 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.”

Carillion was created in 1999 when the Tarmac Group demerged into a building materials company that kept the Tarmac name and a company focused on support services and construction services, called Carillion. It included the former construction business of George Wimpey, which it swapped for its Tarmac house-building division.

Since 1999, Carillion has acquired Mowlem (2006), Alfred McAlpine (2008), Vanbots (2008) and Eaga (2011).

Contingency plans take hold in wake of Carillion collapse

Carillion is part of a coalition delivering the Aberdeen Western Peripheral Route (AWPR)

Clients and joint ventures partners of collapsed contractor Carillion have taken steps to begin contingency plans after the firm entered compulsory liquidation today.

An application was made to the High Court for a compulsory liquidation of the UK’s second largest construction company before opening of business this morning after talks with the UK government to save the company were unsuccessful.

The firm had been involved in the £745 million Aberdeen Western Peripheral Route (AWPR) and had contracts with Registers of Scotland, the Scottish Children’s Reporter Administration, West of Scotland Housing Association and NHS Greater Glasgow and Clyde among many others.

Network Rail awarded Carillion a contract last year to deliver platform extension works and the firm is also responsible for two facilities management contracts worth £158m with the Ministry of Defence (MoD) which cover 83 military sites in Scotland.

Contingency plans have now been put into effect with the hope to minimise disruption to the projects.

Galliford Try is in joint venture with Carillion and Balfour Beatty on the construction of the £550m section of the AWPR between Balmedie and Tipperty for Transport Scotland.

“The Scottish Government are in discussions with the liquidators and the UK government to support Carillion employees and secure the completion of contracts.”

Economy secretary Keith Brown

Galliford Try said: “The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract.  Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80m, of which any shortfall will be funded equally between the joint venture members. The companies will discuss the position urgently with the official receiver of Carillion and Transport Scotland, to minimise any impact on the project.”

A Transport Scotland spokesman reiterated the bypass project will be completed by the spring.

He said: “We expect that any impact on the AWPR will be mitigated by the fact that Carillion’s construction partners are joint and severally liable and as such, the other two construction partners remain fully responsible for the completion of the works.

“Aberdeen Roads Limited, the construction joint venture for the project, confirmed recently that they remain committed to the delivery of this project.”

Amey has incorporated joint ventures with Carillion to deliver the regional prime and national housing contracts for the MoD, through the Defence Infrastructure Organisation (DIO). These contracts maintain the MOD estate in the UK.

It said: “The terms of the joint ventures’ arrangements mean that Amey will continue the services now that Carillion has announced it is entering into immediate compulsory liquidation. Amey is committed to doing this and ensuring continuity of service to the DIO and MOD and the service men and women in the UK.

“For the past few weeks, Amey has been working on detailed contingency plans with the DIO and the Cabinet Office to ensure it can effectively continue to manage the contracts and these are being implemented today.

“Amey confirms it is fully prepared to continue the service obligation of the contracts without adverse effect on the employees of the joint ventures or the supply chain.”

Network Rail commissioned Carillion for both the Waverley platforms extension project and the electrification of the railway line through Shotts.

In addition, the firm was also contracted for platform works at Broughty Ferry and Aberdeen railway stations.

Carillion Powerlines secured an £11.6m contract to carry out electrification work on the Shotts line in December

A Network Rail spokesman said: “We are activating our contingency plans as a result of this unfortunate news.

“We will be working closely with the administrators and Carillion’s management team to ensure projects that they are working on continue and that the supply chain is maintained for this important work.

“Our aim is to ensure that this news has as little impact as possible on our projects to grow and expand the railway network.”

Kier Group, which currently operates joint ventures involving Carillion on HS2 and the Highways England smart motorways programme, jobs, will now have to take them on alone or seek a new partner.

A Kier spokeswoman said: “We have put in place contingency plans for each of these projects and are working closely with clients so as to achieve continuity of service.

“Following today’s announcement and after a short period of transition for these contracts, we do not expect there to be an adverse financial impact on the group arising from these joint venture contracts.”

The Construction Industry Training Board (CITB) said that it was “taking steps to secure the future of the 1,400 Carillion apprentices” by redeploying them to other firms.

CITB chief executive, Sarah Beale, said: “The news of Carillion entering insolvency is clearly a significant blow to the UK construction sector. While this will present the sector with a number of challenges, CITB’s priority is to do all it can to ensure that Carillion apprentices can continue their training so their skills are not lost.

“We have established a project team to work with the apprentices and will be offering in principle grant and apprenticeship transfer incentives to our employer base in order to retain these learners. We will be working closely with the ESFA, the official receiver and our network of college providers so that every possible support is in place to help these apprentices continue their training. We will be liaising with the official receiver with a view to contacting the apprentices as soon as possible.”

The Scottish Government said it is in talks to support Carillion employees and secure the completion of contracts in Scotland.

Cabinet secretary for the economy, Keith Brown, said: “Our first thoughts are with those Carillion employees who will be concerned for their jobs today and we are in discussions with the liquidators and the UK government regarding the measures they intend to put in place regarding private sector, Network Rail and UK govternment-backed contracts in Scotland to support Carillion employees and to secure the completion of these contracts.

“The Scottish Government has been working to manage or eliminate risks associated with Carillion’s difficulties since July last year and we have contingency plans in place for affected contracts, including the AWPR where the contract contains a mechanism for the remaining two joint venture partners to deliver the project and we expect that work to continue.

“I have spoken to the Secretary of State for Scotland this morning and my officials have also spoken with PwC to establish the situation and should it be necessary we stand ready to support for any affected employees through our Partnership Action for Continuing Employment (PACE) initiative which aims to minimise the time individuals affected by redundancy are out of work.”

‘Procurement lessons must be learned’ after Carillion demise

Trade bodies and unions have called on both the UK and Scottish governments to ensure that appropriate lessons are learned for future decisions on the procurement of large scale construction projects following the collapse on the UK’s second biggest construction firm.

Carillion was placed into compulsory liquidation before opening of business this morning after talks with the UK government to save the company were unsuccessful.

The firm had been involved in the £745 million Aberdeen Western Peripheral Route (AWPR) and had contracts with NHS Greater Glasgow and Clyde and Network Rail among many others and was also responsible for two facilities management contracts worth £158m with the Ministry of Defence (MoD) which cover 83 military sites in Scotland.

The Scottish Building Federation (SBF) said the Scottish Government must learn lessons on the procurement of large scale construction projects and also raised concerns about the potential impact of the company’s liquidation on smaller subcontractors currently working on major projects.

Scottish Building Federation President Stephen Kemp, managing director of Orkney Builders, said: “The news that Carillion has now gone into liquidation has major ramifications for the UK construction sector. But it should also stand as an important lesson for government that, when it comes to awarding public sector work, big is by no means always best. As a trade federation, we have long argued that the bundling of contracts into huge frameworks that only the very biggest companies can bid for is not only detrimental for SME contractors that are unable to compete – it also creates big risks for government when something like this happens.”

Mr Kemp added: “I think the Scottish Government needs to take a closer look at procurement practices and put in place measures to enable greater SME participation. This may require the procuring authority to do more work to manage the contract across multiple contractors. But spreading the work and associated risk across multiple smaller companies would not only be good for the industry – it should deliver better outcomes for the taxpayer.”

Willie Gray, managing director of William Gray Construction and director of the Scottish Building Federation, said: “We are concerned about the potential fall-out of this news on smaller contractors working on major projects involving Carillion such as the Aberdeen Western Peripheral Route. We are now contacting the SBF membership across Scotland to identify any subcontractors who may have been adversely affected by Carillion going into liquidation. We will be offering them whatever help we can to negotiate this difficult period and ensure those adverse effects are kept to a minimum.”

The Federation of Master Builders (FMB) said the UK government must learn from Carillion’s demise and assess its over-reliance on major contractors.

Brian Berry, chief executive of the FMB, said: “Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise.”

He added: “Carillion’s liquidation raises serious questions for the government, not least about its over-reliance on major contractors. The government needs to open up public sector construction contracts to small and micro firms by breaking larger contracts down into smaller lots. That way, it can spread its risk while also reaping the benefits that come from procuring a greater proportion of its work from a broad range of small companies.

“Construction SMEs train two-thirds of all apprentices and are a sure-fire way of spreading economic growth more evenly throughout the UK.”

The Association for Consultancy and Engineering (ACE) warned that the collapse of Carillion also has a number of major ramifications for its own industry.

Chief executive, Dr Nelson Ogunshakin OBE, said: “It’s always a sad day when a company goes into liquidation, putting at risk thousands of jobs and livelihoods.”

He added: “In the immediate term, we need to ensure that our members from the consultancy and engineering sector, who worked with Carillion on some of the key infrastructure contracts they held, are paid. There are always competing interests when a company goes into liquidation, but the importance of our members to delivering the nation’s infrastructure is such that we would argue they should be at the front of any queue. We will lobby the government and creditors to ensure that this is the case.

“In the medium term, our members are ready and willing to provide their knowledge, expertise and guidance to the government to help see them through the difficult months ahead. We cannot allow the collapse of Carillion to slow the delivery of some of our major infrastructure projects like HS2, nor affect the maintenance of our existing infrastructure, like the rail network.

“In the long term, this is an awakening for major structural change in the construction industry. The challenges of low profitability and negative cash flow experienced by the contracting sector confirm that the current procurement process is broken. A new business model, coupled with client leadership, is urgently required to make our industry fit-for-the-future and ensure we won’t experience difficulties with other major players.”

Unions have warned that the collapse of Carillion collapse must not mean “business as usual” for the UK’s largest companies and is another example of the “perils of privatisation” within the public sector.

Jim Kennedy, Unite national officer for local government, said: “These have been a grim few days for this workforce. They will head into work today not knowing if their wages, pensions and even their jobs are safe.

“The administrator must provide reassurances on these to the workforce as a matter of urgency, and also that vital public services on which many depend will continue to be provided.

“We will be seeking a meeting with the administrator today to press home that that the priorities now are not the shareholders but the workers who provide the service and the people relying on them.

“One thing is evidently clear from this: there must be no business as usual for big business.  There has to be an urgent inquiry into how a company that loaded itself with debt, which undercut competitors with unsustainable bids, which hoovered up vats of public money, and that had repeatedly alerted the government to its own financial shortcomings got its hands on so much of the public sector and taxpayers’ cash.

“We are also very concerned about the impact of Carillion’s collapse on the wider supply chain. Many of these small firms are the lifeblood of their community but their exposure to Carillion’s debt puts them at serious risk.

“PWC must put workers and suppliers at the head of the queue for payment, not the banks and certainly not the Carillion boardroom whose greed and recklessness has brought this giant company to its knees and imperiled so much of our public services.”

Rehana Azam, GMB national secretary, added: “The fact such a massive government contractor like Carillion has been allowed to go into administration shows the complete failure of a system that has put our public services in the grip of shady profit making contractors.

“The priority now for the government and administrators is making sure kids in schools still get fed to day – and our members still have jobs and pensions.

“There is no place for private companies who answer to shareholders, not patients, parents and service users in our public services.

“What’s happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons.”

GMB also called on Prime Minister Theresa May to act immediately to take Carillion contracts into public ownership.

The union called for a full and transparent inquiry into the provision of public services by private sector contractors once jobs and services were secured.

Tim Roache, GMB general secretary, said: “The Prime Minister must act right now to bring Carillion contracts back into public ownership. That is the only way to safeguard the jobs and services this mess has put at risk.

“Merely propping up this botched shell of a company is not a secure or stable solution for our public services. It’s high time we brought this vital work back in house.

“Despite months of profit warnings, ministers have failed to prepare for the collapse of Carillion, which has plunged workers into crisis today.

“The government has continued to spoon-feed the company taxpayers’ money by awarding them yet more contracts. Ministers should be hanging their heads in shame today – it’s a complete shambles.

“Carillion is the tip of the iceberg. Continued privatisations have mortgaged our future and services that we all rely on to profiteering companies.

“The minute jobs and services are secure, the Prime Minister must conduct a full and transparent inquiry into the provision of public services by private sector contractors with a view to taking them back under public control. What is unfolding at Carillion must never be allowed to happen again.”

The Federation of Small Businesses (FSB) stressed the importance of Carillion’s small suppliers being paid what they are owed.

FSB national chairman, Mike Cherry, said: “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees.

“These unpaid bills may well go back several months. I wrote to Carillion back in July last year to express concern after hearing from FSB members that the company was making small suppliers wait 120 days to be paid.

“Sadly these kind of poor payment practices are all too common among some big corporates. Perhaps if they weren’t it would be easier to spot the warning signs of a huge company in financial trouble.

“When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses. Public procurement must be much more small-business friendly, in which it is easier for small firms to navigate the system and the Government should prioritise meeting its target of at least one third of taxpayer-funded contracts going to smaller firms.”

The Institute of Directors (IoD) said governments must consider how they can better monitor the robustness of governance at key contractors.

Roger Barker, head of corporate governance, said: “We are still in the early stages of finding out what went wrong at Carillion. However, it is clear that major providers of public services must be governed in a prudent manner. Today’s outcome suggests that effective governance was lacking at Carillion, and we must now consider if the board and shareholders have exercised appropriate oversight prior to the collapse.

“There are some worrying signs. The relaxation of clawback conditions for executive bonuses in 2016 appears in retrospect to be highly inappropriate. It does no good to the reputation of UK business when top managers appear to benefit in spite of the collapse of the organisations that they are responsible for.

“Going forward, it may be necessary for government to consider how it can better monitor the robustness of governance at key contractors.”

Carillion faces investigation by Financial Conduct Authority

Construction and outsourcing firm Carillion is being investigated by the UK financial services watchdog over statements issued over the first half of last year.

In a brief statement to the stock exchange this morning, Carillion said the Financial Conduct Authority (FCA) is investigating “the timeliness and content of announcements made by Carillion between 7 December 2016 and 10 July 2017”.

“Carillion is cooperating fully with the FCA,” the company added.

Between December 2016 and mid July 2017 Carillion’s share price plummeted 76% from 256 pence to 55 pence on the back of profits warnings that resulted in the removal of chief executive Richard Howson.

The firm’s bumpy year was compounded in November when it revealed that it expects to breach its financial covenants by the end of December and that full-year profits will be “materially lower” than current expectations.

The FCA has made no official statement as yet outlining the scope of the investigation.

Aberdeen bypass contractor fined over river pollution

SEPA chief executive Terry A’Hearn

The consortium building the new Aberdeen bypass has been issued with a £280,000 penalty for a series of silt pollution incidents on the rivers Don and Dee.

Aberdeen Roads Limited, a joint venture including Balfour BeattyMorrison Construction and Carillion, was deemed responsible for the incidents on the important salmon rivers along with some tributaries.

The case if the first major enforcement of new powers by the Scottish Environment Protection Agency (SEPA) and will see over £280,000 committed to community projects and environmental improvements across Aberdeenshire.

Following extensive investigations and enforcement action by SEPA between 2015 and 2017, the Construction Joint Venture (CJV) building the multi-million pound Aberdeen Western Peripheral Route (AWPR) have offered the funding in an Offer of Enforcement Undertaking, after causing a series of silt pollution incidents which affected the Aberdeenshire rivers.

The Enforcement Undertaking admits full liability by the AWPR B-T Construction Joint Venture (CJV) for the pollution and will result in the funding being divided between eight community initiatives as a penalty for the disruption and environmental impact.

The offer, which required the Construction Joint Venture to engage with local stakeholders, has been formally accepted by SEPA, thus securing one of the biggest financial outcomes for an environmental offence in Scotland.  It is only the fourth of its kind to be accepted by SEPA.

Granted as a new enforcement power in June 2016, an Enforcement Undertaking represents a formal offer by an organisation or individual to make amends for an offence by improving the environment or communities affected, using their own resources.

The new enforcement power can be used to bring about effective and immediate solutions to environmental offences and requires the offender to work with SEPA to ensure ongoing compliance in future, as well as making appropriate restitution.

SEPA chief executive, Terry A’Hearn, said: “Every day SEPA works to protect and enhance Scotland’s environment and we will respond robustly to organisations who fail to comply with environmental controls. Every operator must comply.

“It’s right that the Construction Joint Venture should offer this significant enforcement undertaking in recognition of the environmental impact of their actions, which resulted in a series of silt pollution incidents impacting numerous tributaries to Aberdeenshire rivers, the Dee and the Don.

“We are delighted that CJV has become one of the first operators to use the new enforcement undertaking.  The CJV has stepped forward, accepted responsibility and set out to put things right.

“An enforcement undertaking not only compels those who breach the law to make amends, it instils a more positive working relationship based on understanding the duty we all share in safeguarding our natural environment.”

 

Aberdeen Roads Limited is constructing the new 36-mile road which will provide a fast link between towns between the North, South and West of Aberdeen.

The project is being delivered by Transport Scotland on behalf of the Scottish Government and in partnership with Aberdeen City Council and Aberdeenshire Council.

The silt pollution was caused by heavy rainfall which led to muddy water running off the construction site into waterways.

An enforcement notice was issued to contractors last year after concerns were raised at the time about the impact it could have on salmon and freshwater pearl mussels.

Transport Scotland said: “We take our environmental responsibilities very seriously and have been working closely with SEPA and the contractor, Aberdeen Roads Ltd (ARL), to ensure the watercourses on site are protected from construction activities.

“We welcome any measures that have been agreed between SEPA and ARL where they result in a positive impact on the environment.”

The biggest beneficiary of the undertaking is the Dee District Salmon Fishery Board, which will receive £112,500 for improvement projects relating to diffuse pollution, and £37,500 to fund an agricultural officer for two years to assist farm owners in reducing diffuse pollution in the River Don.

Richard Gledson, chairman, Dee District Salmon Fisheries Board, added: “Silt pollution from the construction of the Aberdeen Western Peripheral Route gave us great cause for concern, particularly as the River Dee is designated as a special habitat for both salmonid fish and fresh water pearl mussels, which rely on a delicate eco-system to feed and spawn.

“We welcome both the immediate response by SEPA, including the temporary restriction of construction activity, their investigation, and today’s enforcement undertaking. This will provide for environmental improvements that will go some way to offsetting the impact on local communities and the environment.”

In addition to the funding for community and environmental benefits, SEPA will also recover £47,958 as part of the offer. This lump sum will be made by the CJV as a contribution towards the time spent investigating the various pollution incidents which resulted from their construction works.

New Carillion chief executive to start sooner than expected

Andrew Davies

Andrew Davies is to begin work in his new position as chief executive officer at Carillion earlier than expected after an agreement was reached with Wates Group.

Carillion announced the appointment of Mr Davies back in October, though his start date was set as April 2 next year due to his contractual ties to Wates.

The Wates Board has now agreed to allow Mr Davies to assume his appointment with effect from January 22, at which point he will also join the Carillion Board.

Keith Cochrane will step down from his role as interim chief executive officer, and from the Board, on that date but will remain with Carillion in an advisory capacity for a period thereafter in order to ensure an orderly transition.

Carillion chairman Philip Green, said: “We are very grateful to the Board of Wates Group Ltd, and to James Wates CBE, their chairman, for their facilitation of Andrew’s earlier appointment. It is a demonstration of how the sector is willing to cooperate and collaborate to ensure the long term sustainability of UK industry.

“As I said when we announced his appointment, Andrew has the ideal combination of commerciality, operational expertise and relevant sector experience to build on the conclusions of the strategic review and to lead the on-going transformation of the business, and I look forward to his bringing that experience and expertise to Carillion in the New Year.”

Andrew Davies was appointed chief executive of Wates Group in 2014.  Before that he held a series of senior roles with BAE Systems over 28 years.

Carillion wins £11.6m Shotts Line electrification deal

Carillion Powerlines has secured a £11.6 million contract to carry out electrification work on the Shotts line.

The company will deliver enhancements to nine stations on the route between Holytown Junction and Midcalder Junction.

Features include platform reconstructions and renewals and enhancements to lighting, CCTV and customer information systems. Two stations at Livingston South and Breich are to be complete rebuilt with platforms extended at Carfin, Shotts and West Calder to enable the introduction of longer trains on the route.

Work on the stations element of the project is due to be completed in autumn 2018.

The electrification of 74km of railway along the Shotts line, as part of a wider £160m Scottish Government investment in the line, is due finish by March 2019.

Iain McFarlane, route delivery director for Network Rail, said: “This contract is another step forward for the delivery of the Shotts electrification project and further underlines our commitment to investing in and enhancing our infrastructure as part of our UK-wide railway upgrade plan.

“Electrification of the line across North Lanarkshire and West Lothian coupled with improvements at stations will transform the journey experience for rail passengers who will enjoy the benefits of improved services for many years to come.

“Throughout this project we will work closely with contractors, train operators and other stakeholders to deliver in the most efficient and cost-effective way possible while minimising disruption for both lineside communities and passengers.”

Martin C Smith, managing director at Carillon Powerlines, said: “We are delighted to have been awarded this contract to electrify the Shotts line across central Scotland and we look forward to working with the project team to enhance the railway network.

“This award reflects the depth of experience we can demonstrate in delivering infrastructure enhancements in a railway environment and will further enhance the relationship we have developed with Network Rail.”