Construction Giant Carillion Goes Into Liquidation

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Construction Giant Carillion Goes Into Liquidation

Construction company Carillion has announced that it has gone into liquidation after talks with lenders over the weekend ended fruitlessly. Sources from inside Whitehall say that the government refused to lend the firm £20 million, which Carillion had apparently hoped would convince lenders to put some money into the pot.

According to the Guardian, the government’s Insolvency Service has encouraged the company’s 19,500-strong workforce to go into work as they would usually, assuring them that they would get paid to provide services such as prison maintenance, hospital cleaning and providing school dinners.

Other concerns have arisen regarding Carillion’s public and private sector contracts, including the HS2 rail links. Kier and Eiffage – which are the other two construction partners involved in the building of the high speed rail network – have stressed that they will be able to build the section of the line between London and Birmingham without Carillion involved.

Cabinet Office minister David Lidington defended the government for not bailing out the firm, saying that contingency plans had been created in July last year so that if Carillion did falter other contractors would assume its responsibilities immediately.

Shadow Cabinet Office minister Jon Trickett added, however: “Given £2 billion worth of government contracts were awarded in the time three profit warnings were given by Carillion, a serious investigation needs to be launched into the government’s handling of this matter.”

The company found itself in difficulties in 2017 after issuing three profit warnings over a period of five months and writing down over £1 billion on contracts in the UK, Canada and the Middle East. Carillion currently has a £600 million pension deficit and debts of around £1 billion. It’s also being investigated by the Financial Conduct Authority over announcements it made between December 2016 and July last year.

For those workers concerned about their pensions, the director of policy at Royal London Steve Webb has issued reassuring words, saying that both current employees and those who are retired will have their pensions protected by the Pensions Protection Fund (PPF).

If you do work for Carillion and are concerned that the firm owes you money that you may not receive because it is now insolvent, rest assured that the money will be paid to you by the government. You may not get everything owed to you but you can claim for redundancy, statutory notice pay, up to eight weeks’ wages, up to six weeks’ holiday pay, unpaid pension contributions and a basic award for unfair dismissal. You can receive up to £489 a week for each claim.

“Although there is a big shortfall across the Carillion pension schemes, the PPF is financially strong and will be able to pay out pensions in line with its normal rules. The deficit in the Carillion schemes will not sink the pensions lifeboat,” Mr Webb went on to say.

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