Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Carillion: Subbies halt work on several Network Rail sites

Subcontractors have stopped work and removed equipment on some Carillion Network Rail sites, the transport body has confirmed.

Ground engineering specialist Van Elle’s chief executive Jon Fenton told Construction News it had “demobilised from sites” and would not return until it had a “firm contractual arrangement in place”.

Network Rail confirmed to CN that a “handful” of suppliers had withdrawn from Carillion sites and that the impact on the overall project was “negligible”.

Mr Fenton said that communication from Carillion’s special manager’s PwC had been “sporadic” and was “nothing we could rely on in court if we had to take them to task”.

He confirmed negotiations were ongoing between the transport body, Carillion and PwC, but could not put a timescale on any resolution being reached.

Van Elle yesterday announced its results for the six months to 31 October 2017, reporting a 22 per cent rise in revenue to £52.6m. The company also confirmed £1.6m of bad debt from jobs carried out for Carillion.

Mr Fenton told CN this debt was for work undertaken in the months of December and early January.

The significant volume work carried out over the Christmas period meant Van Elle’s exposure to Carillion’s collapse was higher than if it had occurred at a different time of year.

The Van Elle boss expressed his shock at Carillion’s sudden demise and said the government’s decision to place large orders with the contractor had been “deceptive”.

“The government was placing massive contracts with Carillion right up to the end on HS2, so the messaging out there was deceptive,” he said.

“It’s a crying shame when there are a multitude of subcontractors out there trying to make a living and then a big beast like that goes bust and lets everybody down.

“We had a huge effort over Christmas, that’s where the bulk of the money was. It’s disappointing there are not mechanisms in place to safeguard that.”

A Network Rail spokesman said: “A handful of suppliers have withdrawn their goods or services but they have been mitigated and managed, and the impact on the overall project is negligible.

“Some suppliers have had direct calls from our people and returned to the job having had that comfort and reassurance.”

In the aftermath of the Carillion collapse, the contractor’s rail supply chain director sent a letter to suppliers telling them they would not be paid for any work carried out before the firm went into liquidation.

At the end of last week Network Rail said Carillion staff working on its projects would be guaranteed pay until mid-April, despite the contractor’s demise.

The client added that it was working closely with PwC to evaluate the cost of work done on Network Rail contracts in the period up to liquidation and would try to provide clarity to suppliers as quickly as possible.

Van Elle updated CN on its search for a new chief executive, as current incumbent Jon Fenton is stepping down due to a family matter.

The firm said the replacement process was “full steam ahead” and it hoped to make an announcement in due course.

Readers' comments (2)

  • i think its another example of the poor way this industry treats its very hard working sub contractors, the client cannot stand back and say its not in some way responsible for the collapse of carillion, after all if carillion was making money on all of its jobs they would have survived. that client must be holding onto a huge amount of money owed to carillion, pay it to the sub contractors and give the receivers a bloody nose

    Unsuitable or offensive? Report this comment

  • Imagine if Carillion went bust before Christmas and what a major impact that would have had on Network Rails upgrade programme. Works which take months of planning.

    Is it me or is it all rather convenient that Carillion went bust just after they had completed these works. I can't see how a months worth of intense risky rail work would have saved a company with hundreds of millions of pounds of debt. They should of gone into liquidation months ago.

    Unsuitable or offensive? Report this comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.