UPDATED: Aylesbury MP David Lidington speaks out after HS2 contractor Carillion collapses
Thousands of jobs, and the future of HS2, now at risk after bailout talks with the government break down.
With 20,000 jobs in the UK, the construction firm is one of the countries biggest contractors. Now, Â£1.5bn of debt has bought the company to its knees.
Chairman Phillip 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 and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.
"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.”
Speaking on Radio 4's Today, Aylesbury MP David Lidington said: "This is a private sector company, it's regrettable it hasn't been able to find a suitable refinancing option with its lenders. We did decide that taxpayers cant be expected to bail out a private sector company especially when their troubles, for the most part, arose from a side of their business that's nothing to do with UK government contracts.
"Ever since the profit warnings were announced during the course of last year, the various government departments that have had business with Carillion have been drawing up contingency plans about how they might respond.
"In the event that there was a crisis like that which we are seeing, we hoped they would be successful with their bankers and their other creditors in the way they assured us they were confident they would be. The contracts that were awarded by some government agencies and departments after July last year, you will see those are joint venture arrangements.
"Projects like HS2 have other joint venture partners where the contract was written in such a way that those other partners have to come in and they have to take up responsibilities."
Brian Berry, Chief Executive of the Federation of Master Builders , 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’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.”
Carillion’s chief executive Richard Howson stepped down in July after the first profit warning.
Its new boss, Andrew Davies, is taking over from the interim chief executive, Keith Cochrane, on 22 January, three months earlier than planned.