Construction giant Carillion, which is behind the A50 roadworks in East Staffordshire, has gone into compulsory liquidation after last-minute talks with the Government and its backers failed to produce a rescue plan.

The firm, the UK's second biggest construction company, employs 20,000 workers in the UK and 43,000 staff worldwide, is also responsible for much of Network Rail's track maintenance work as a contractor.

Many more businesses and jobs are tied up with the company, carrying out engineering and design works. The firm is responsible for many roadworks up and down the country, including the improvements work on the A50 at Uttoxeter.

There has not been any announcement made on if, or how many, jobs could be lost.

Carillion, based in Wolverhampton, has debts of £1.5 billion and a £587 million pensions shortfall.

The company, which also has a railway hub off the A61 through Derby, is behind the £40 million ongoing construction work for the A50 Growth Corridor through Uttoxeter - due to be completed this November.

Carillion, behind construction works on the A50 in Uttoxeter, is heading for liquidation
Carillion, behind construction works on the A50 in Uttoxeter, is heading for liquidation

A further stage of this construction is set to take place on January 29, 30 and February 3 when the A50 will be closed westbound, on January 31, February 1-2, the A50 will be closed eastbound.

Staffordshire County Council hired Carillion to carry out these works, on behalf of Highways England, which manages the A50.

County council cabinet member for economic growth, Mark Winnington, sent his sympathies to all the employees affected by Carillion's "collapse" and reassured that contingency plans are in place to make sure the A50 scheme runs ahead as planned.

He said: "Carillion’s collapse is terrible news for its employees, and worrying too for others indirectly affected by it.

"They all have my sympathy and obviously we will help in any way we can.

"Staffordshire County Council has only one commercial relationship with Carillion.

Mark Winnington has been appointed by Staffordshire County Council as the cabinet member in charge of HS2
Mark Winnington has been appointed by Staffordshire County Council as the cabinet member in charge of HS2

"The company is part of a Joint Venture partnership, with Tarmac, which jointly manages the work of the A50 Project A scheme at Uttoxeter.

"It's also important to make clear that this project is being delivered by Staffordshire County Council on behalf of Highways England, which has been monitoring the situation for some time and has developed contingency plans to ensure the continued safe delivery of any schemes that Carillion is involved in.

"We've had several detailed conversations with the Joint Venture to understand the situation and the clear intention is that work will continue as planned on this important project.

"For instance, overnight carriageway closures are still scheduled for the end of this month so narrow lanes can be introduced to protect contractors working close to the A50."

These improvements were announced in December 2013 and will see improved access to the JCB factories and new housing and employment sites around the town - along with a new bridge, roundabouts and sliproads.

Neither Derbyshire County Council or Leicestershire County Council have direct contracts with Carillion.

Philip Green, chairman of Carillion, said today: "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."

Carillion is heading for liquidation
Carillion is heading for liquidation

Carillion is also the company behind under-construction Midland Metropolitan Hospital in Smethwick near Birmingham, along with the Royal Liverpool University Hospital, Beetham Tower in Manchester and the Tate Modern - among many others.

Carillion is also building part of the HS2, high speed train line, between London, Birmingham, Leeds and Manchester. This set to include going through part of Measham, impacting on a section of the Ashby Canal.

This joint venture contract was worth £1.4 billion.

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The company also maintains 50,000 homes for the Ministry of Defence, provides 11,500 in-patient hospital beds, manages nearly 900 schools in the UK - including 218 schools' meal service - and holds £200 million in prison contracts across 50 sites.

Oxfordshire County Council is among those which have announced it will take on some of Carillion's services, bringing its school meals contract in-house.

It is thought that the UK Government will prop up funding for the company's public sector contracts, while some may be taken in-house by the relevant company's or services they were working for.

Jim Kennedy, national officer for local government at the Unite union, worried that workers' "hard-saved pensions" were in danger of being "dragged under."

He said: "Public services, vast amounts of public money, thousands of jobs - including in a lengthy supply chain of insecure agency workers who are also at risk - and workers' hard-saved pensions are all in danger of being dragged under by yet another bout of reckless corporate irresponsibility.

"There are also serious questions that need to be asked and answered about Carillion's conduct. Did directors move to protect their bonuses before the financial stability of the company? Has the company mushroomed because it built its business on unrealistic undercutting and blacklisting?

"Why did the government continue to hand over public money to a company that had issued repeated profits warnings?"

Commenting on the landmark news for Carillion, the Federation of Master Builders (FMB) says that the Government must stop its reliance on major contractors in favour of smaller firms.

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."

Carillion, behind construction works on the A50 in Uttoxeter, is heading for liquidation
Carillion, behind construction works on the A50 in Uttoxeter, is heading for liquidation

"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 Wolverhampton-based firm said weekend crunch talks aimed at driving down debt and shoring up its balance sheet had failed to result in the "short term financial support" it needed to continue trading while a deal was reached.

Cabinet Office Minister David Lidington said there would be no "fire sale" of Carillion assets and the cost of the process to taxpayers would be "considerably less" than an unmanaged collapse.

Workers will continue to be paid via the official receiver, he said.

Advice for Carillion employees:

Government branch the Insolvency Service will take over the company through liquidation and will ensure continuity of public services.

It advises that staff at Carillion will have their salaries safeguarded.

The service issued the following advice and details:

  • employees should continue to turn up for work and will be paid as normal
  • any employee worried about their pension situation can ring The Pension Advisory Service (TPAS) on 0300 123 1047 for free and impartial guidance
  • The Pension Advisory Service (TPAS) has also set up a special helpline number for members of these pension schemes: 020 7630 2715. Those already receiving their pensions will continue to receive payment
  • a dedicated website has been set up to provide information for anyone affected - see www.pwc.co.uk/carillion and a dedicated helpline – 0800 063 9282