County council cuts ties with Carillion after £10.65m payment

The local authority had already agreed to formally terminate its contract at the end of June but it has been brought forward to February 1, following the company’s liquidation last week.

The county council made a net payment of £10.65m to cover work already completed as part of the final settlement, including school meals and cleaning; maintenance of council buildings; property services, and building work.

If the council had not struck the exit deal early and made the payment in December, weeks before liquidation, a spokesman said it would now be facing the prospect of lengthy litigation to end the contract.

Cabinet member for property, cultural and community services Cllr Lorraine Lindsay-Gale said: “We brought the process forward and legally terminated our contact and will be taking over those services to ensure continuity.

“Carillion’s financial problems were not the original reason we wanted to end the contract.

“But as the scale of the company’s problems became apparent we are very glad we ended the contract when we did.

“The reality is that if we had not ended the contract and settled with the liquidators, we would now be tied up in lengthy negotiations to end our involvement with the company.

“This early exit deal means we can get on with finding better ways to deliver services that Carillion provided.”

Many Carillion staff and sub-contractors will become county council employees to make sure services are continued, and the council will honour the collapsed firm’s payments.

Officers are reviewing the uncompleted works under the Carillion contract and talking to sub-contractors about the best way forward, a spokesman said.

The council has paid approximately £148m to Carillion since a ten-year contract was signed in 2012.

Last summer the county council announced it had agreed with Carillion to end parts of the contract, leaving only facilities management (maintenance, cleaning and school meals) which was due for a review.

Following that review, it was agreed to end all remaining parts of the contract by June 30, 2018, as ‘the council’s policies and strategies have changed so the arrangement with Carillion made less commercial sense’.

Cllr Lindsay-Gale said: “We recognise the significant impact on local companies working for Carillion that may be owed money and hope that work can continue as soon as possible.

“We are very grateful to Carillion staff and suppliers for helping us to deliver essential services in the short term and now want to work closely with contractors and suppliers on a longer-term basis.”

Are you a sub-contractor or staff affected by the Carillion collapse? If you would like to talk to the Banbury Guardian about your experience, email [email protected].