Firefighters are on standby to deliver school meals to children in at least one area of the country as councils and other public bodies scramble to deal with the collapse of the outsourcing firm, Carillion.
The company provided a host of services to the NHS, as well as schools and other organisations across the country that will need to be covered.
Oxfordshire county council, was forced to put the firefighters on notice after Carillion’s downfall left the provision of school meals in the short term in doubt.
What was Carillion?
The Wolverhampton-based firm was second only to Balfour Beatty in size.
It was spun out of the Tarmac construction business in 1999 and steadily took over rivals, such as Mowlem and Alfred McAlpine. It expanded into Canada and built a construction arm in the Middle East.
Carillion then diversified into outsourcing, taking on contracts such as running the mailroom at the Nationwide building society to helping upgrade UK broadband for BT Openreach. It took over running public service projects, ranging from prison and hospital maintenance to cooking school meals. In 2017 a third of its revenue – £1.7bn – came from state contracts. It employs 43,000 people, with more than 19,000 in the UK.
Notable construction projects
• GCHQ government communications centre in Cheltenham (2003)
• Beetham Tower, Manchester (2006)
• HS1 (2007)
• London Olympics Media Centre - now BT Sport HQ (2011)
• Heathrow terminal 5 (2011)
• The Library of Birmingham (2013)
• *Liverpool FC Anfield stadium expansion (2016)~
• Midland Metropolitan Hospital in Smethwick (due 2019)
• Aberdeen bypass (due 2018)
• Royal Liverpool University Hospital (due 2018, behind schedule)
Government contracts
• NHS – managed 200 operating theatres; 11,800 beds; made 18,500 patient meals a day
• Transport – “smart motorways” to monitor traffic and ease congestion; work on HS2; track renewal for Network Rail; Crossrail contractor
• Defence – maintained 50,000 armed forces’ houses; a £680m contract to provide 130 new buildings in Aldershot and Salisbury plain for troops returning from Germany
• Education – cleaning and meals for 875 schools
•Prisons – maintained 50% of UK prisons.
Barnsley council said its secondary schools, which rely on Carillion for caretaking, cleaning and maintenance services, would operate as usual because Whitehall had guaranteed that work contracted to Carillion would be covered, but the council was unable to say exactly how on Monday.
Andy Street, the former John Lewis boss who became the first mayor of the West Midlands last year, said he was setting up a taskforce to support employees of Carillion and its subcontractors who may be affected by the company’s collapse.
“We don’t yet know how many of those staff will transfer as some parts of the business hopefully are sold on,” he said.There was the potential for major disruption to a road building project run in Leeds for which Carillion was made the preferred bidder only a week ago. The city council’s chief executive said he was assessing the situation. A spokesman declined to say whether there were other bidders in the running, adding that the council was in no rush to push through a deal to get the project under way.
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Lincolnshire county council said it expected Carillion to continue work it was contracted to do on a bypass for the foreseeable future, though it said it would likely find a new contractor to complete the work.
The construction company has been a major player in the education sector, mainly in schools but also universities where it has been involved in providing student accommodation. It says it has built 150 schools and says on its website to have been responsible for facilities management at 875, cleaning services at 245 and mechanical and fabric maintenance at 683. Many schools dependent on these services are tied up in expensive long-term PFI contracts.
However, the Department for Education said Carillion had contracts that cover fewer than 250 schools in England.
A spokesman said: “Our priority is to ensure schools can continue to operate as usual. We have planned extensively for this and have been working with local authorities and academy trusts since before Christmas to make sure contingency plans are in place. We are continuing to offer support to schools help minimise disruption for pupils through our designated advice service.”
Carillion relied on major contracts, some of which proved much less lucrative than it thought.
In 2018 it slashed the value of them by £845m, of which £375m related to major public-private partnerships (PPPs) such as Royal Liverpool University hospital.
As its contracts underperformed, its debts soared to £900m.
The company needed a £300m cash injection, but the banks that lent it money refused to put more in.
The government also refused to step in and bail the firm out.
That left the company unable to continue trading and forced it to go into liquidation.
Jon Coles, the chief executive of United Learning, one of England’s largest academy chains, tweeted that he hoped Carillion’s demise might enable some schools to escape “ludicrous” PFI deals.
Until recent weeks, Carillion sponsored its own academies trust which was responsible for two primary schools in Tameside, Greater Manchester. Parents at one of the schools, the Discovery Academy in Hyde, were sent a letter last week announcing the trust was formally separating from Carillion and the name had changed from the Carillion Academies Trust to the Victorious Academies Trust.
The chief operating officer, Nicky Wise, said discussions to separate began last July and were not connected to Carillion’s current predicament. “Having set up the two academies, Carillion provided a large amount of rigour and support. As soon as the schools grew and became well established, it became sensible for the trust to become more independent and work on its own, and it did not need the sponsorship of Carillion any more.”
The trust still retains contracts with Carillion – including school meal provision, like other schools in Tameside. Wise said lunches were being delivered as normal on Monday.
NHS
• Managed facilities including 200 operating theatres and 11,800 beds
• Made more than 18,500 patient meals per day
• Helpdesks dealt with 1.5m calls per year
• Engineering teams carrying out maintenance work
Transport
• Built 'smart motorways' – which ease congestion by monitoring traffic and adjusting lanes or speed limits – for the Highways Agency
• Major contractor on £56bn HS2 high-speed rail project
• Upgraded track and power lines for Network Rail
• Major contractor on London’s Crossrail project
• Roadbuilding and bridges
Defence
• Managed infrastructure and 50,000 homes for Ministry of Defence
Education
• Designed and built 150 schools
• Catering and cleaning contracts at 875 schools
Prisons
• Maintenance and repairs at about half of UK prisons
Libraries
• Managed several public libraries in England
Energy
• Built substations, overhead cables and other works for National Grid
In Oxfordshire, the county council has taken over all services provided by Carillion, including some school meals and cleaning, and all staff have been told to report for work as usual. Carillion has provided school meals to 18,000 students at 90 schools in the county and is also responsible for facilities management and cleaning services at a number of schools. Most contracts were due to end by April, however.
Alexandra Bailey, the council’s director for property, assets and investment said: “We expect school staff will be in work as normal today but, if this does not happen, we will provide school lunches to schools needing support, and the fire service are on standby to deliver them. We are confident no child will go hungry at school.”
Nottinghamshire county council said Carillion handled some services in two of its schools and a leisure centre and that it was working with contractors to make sure normal service continued. Nottingham city council said three schools relied on Carillion and it had contingency measures in place.
The Local Government Association, which represents 415 local authorities in England and Wales, said contingency plans had been implemented to ensure services were unaffected by Carillion’s liquidation. A spokesman said a relatively small number of councils were affected.
