A question mark hangs over plans to upgrade a main rail route which serves Derby following the collapse of construction giant Carillion.
This morning, it was announced that the firm, which employs 20,000 people in the UK and is involved in landmark infrastructure projects such as HS2, was to go into compulsory liquidation.
It comes after the beleaguered construction and facilities management company failed to secure short-term financial support from stakeholders.
Carillion, which is headquartered in Wolverhampton, is involved in rail projects and maintaining Ministry of Defence properties, as well as managing facilities at schools and prisons.
Its impending liquidation comes after talks between the firm, its lenders and the Government at the weekend failed to end in a deal to save the business.
Carillion is set to go into compulsory liquidation putting tens of thousands of jobs at risk
Last year, Carillion, whose rail business Carillion Rail had an office at the RTC Business Park, in London Road, Derby, was awarded contracts worth £200 million to upgrade the Midland Main Line, the main rail route between Derby and London.
Carillion signed contracts with Network Rail to upgrade track and infrastructure and electrify the route from London to Corby. Although the work would not cover Derby – after the Government pulled the plug on full electrification of the line – Derby rail users travelling to London would still have felt some benefit from the work.
The electric locomotives would be quicker, quieter, more powerful, and more responsive and reliable than diesels engines.
Carillion was awarded the contracts in November – the same month the company issued another profit warning and revealed it was exploring a potential recapitalisation to bolster its balance sheet.
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In a statement, Network Rail said: “Network Rail is activating its contingency plans as a result of this unfortunate news.
“Passengers can be reassured that their services will be running as normal today as Carillion’s work for Network Rail does not involve the day-to-day running of the railway.
Carillion has landed contracts for HS2 (Image: Department for Transport/PA Wire)
“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, as far as possible, that this news has as little impact as possible on our projects to grow and expand the railway network.”
Carillion was also set to deliver elements of HS2. The eastern leg of HS2, between Birmingham and Leeds will run through parts of Derbyshire with the region served by a station at Toton.
The Rail, Maritime and Transport (RMT) has blamed the Government for the collapse of Carillion.
General secretary Mick Cash said: “This is disastrous news for the workforce and disastrous news for transport and public services in Britain. We have been warning since Thursday night that we thought the collapse of the company was imminent.
“The blame for this lies squarely with the Government who are obsessed with out-sourcing key works to these high risk, private enterprises.
“RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members’ jobs and pensions.
At one stage Carillion was responsible for the upkeep of Derby’s roads
“The infrastructure and support works must be immediately taken in house with the workforce protected.”
At one stage, Carillion was responsible for the upkeep of Derby’s roads.
The firm had been responsible for gritting the streets and repairing potholes at a cost of £4 million a year. But, in 2013, Derby City Council decided to bring the work back in-house – a move which it said would save the authority £300,000 a year. The move resulted in 30 Carillion staff joining the council.
Currently, Carillion is involved in ongoing construction work for the £43 million A50 Growth Corridor through Uttoxeter – due to be completed this November.
Carillion is currently involved in a project to create a new junction on the A50 at Uttoxeter
The Highways England-funded project will see the creation of a separated junction to the A50 and associated link roads in Uttoxeter
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.
“Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future.
“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.”
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Source: Derby Telegraph