January 16, 2018 12.42 pm This story is over 54 months old

‘Bring contracts in-house,’ suggests Lincoln MP Karen Lee on Carillion collapse

Lincoln MP has made a plea with the government to ensure jobs aren’t lost due to the liquidation of Carillion.

Member of Parliament for Lincoln Karen Lee has made a plea with the government to ensure jobs are secure and the public sector is protected from financial fallout after Eastern Bypass contractors Carillion went into liquidation.

Some work is continuing as normal on the site of the bypass while Lincolnshire County Council considers how it will move forward with the £99 million project.

The project will be delayed, and progress of the scheme will also depend on the confidence of subcontractors and the supply chain working on the development.

Most of Carillion’s subcontractors have suspended work as of Tuesday, January 16 pending assurances over pay. No appointed subcontractors have terminated their subcontracts with the company.

As reported previously, Carillion, which was awarded the £53 million contract to build the bypass in 2016, collapsed on Monday, January 15 with more than £900 million of debts.

The construction firm had completed around 10% of the project, has been paid £5 million and is still owed £200,000 by the council.

Nationally, ministers are facing questions about how much the liquidation will cost taxpayers. Concerns also remain over the future of jobs in the supply chain.

Lincoln MP Karen Lee said: “Locally, the liquidation of Carillion poses a threat to Lincoln given that Carillion secured the contract for the construction of the Lincoln Eastern Bypass.

“I have approached Lincolnshire County Council for clarification of the situation and understand that Carillion contractors will continue to work on the Lincoln Eastern Bypass for the foreseeable future.

“However, it is possible that due to the volatility of the situation, this could change.

“Notwithstanding the possibility of that happening, Councillor Richard Davies has stated that the decision in appointing Carillion as contractors had been taken when share prices were good and there had been no profit warnings.

“Now, in the 11th hour, the government must mediate Carillion’s liquidation to ensure jobs, projects and the wider public sector are protected from the negative financial ramifications.

“In my view, bringing contracts in house is the best approach to ensuring this is achieved.”

Lincolnshire County Council said it is considering all options, with the most likely being the appointment of a new contractor to manage the construction element of the scene.

Richard Wills, Executive Director for Highways, said: “The Lincoln Eastern Bypass will still be built.

“There may, however, be some delay while we look at all of the options available with progressing the scheme – the most likely one being the appointment of a new contractor to manage and deliver the construction element of the scheme.

“Carillion will try continuing on with some bypass works for the foreseeable future. However, this situation is constantly changing and is dependent on a number of factors, including sub-contractor and supply chain confidence, as most businesses are unlikely to supply materials or labour if there is no guarantee of payment.”

Councillor Richard Davies, executive member for highways, added: “We started the process of appointing Carillion over two years ago when share prices were good and there were no profit warnings.

“All of the standard procurement procedures were followed during this time, and they were announced as our preferred contractor in October 2016 and were officially awarded in December 2016. The first profit warning didn’t come until the middle of 2017 and, once a contract has been awarded, it can’t be easily terminated.

“Among other options, we are currently reviewing further legal advice regarding terminating our contract with Carillion so that no unnecessary costs are incurred.

“Works being carried out by other contractors working on the scheme will also continue, including construction of the new Network Rail bridge, archaeological investigations and Anglian Water works.”