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HS2 ban on Carillion JV would have been 'illegal' – Grayling

Transport secretary Chris Grayling has claimed it would have been “illegal” to prevent Carillion’s HS2 joint venture from winning work, despite the financial issues at the failed contractor.

Mr Grayling told ITV that there was no “legal reason” to stop Carillion’s joint venture from winning contracts on HS2 just weeks after its first profit warning.  

He said: “It’s not for government and it’s not for HS2 to exclude firms, possibly pushing them under because of the impact on their business.

“[It’s] arguably illegal to do so, because there’s no legal reason to exclude them.”

In July, a Carillion / Kier / Eiffage JV was awarded two HS2 civils contracts worth a combined total of £1.4bn for phase one of the line.

The decision came two weeks after Carillion published a profit warning, reporting contract provisions of £845m.

The transport secretary stressed the correct “due diligence” had been carried out, and that significant work had been undertaken in the aftermath of the profit warning to secure assurances from Carillion’s partners to complete the work if the firm was to go under.

Carillion’s fall into liquidation on Monday saw its JV partner Kier take on Carillion staff and apprentices under the HS2 contract.

Mr Grayling said the transition would have no impact on the timetable for HS2, or the cost of the £55.7bn line.

“What we just have to do is make sure that the contract is deliverable – that there’s no financial cost, that we make sure the staff are covered,” he said.

Carillion was also Network Rail’s second biggest supplier before its collapse.

Mr Grayling said there would be “some issues” with the transition of work from Carillion to other suppliers, but that Network Rail had been preparing for the possibility of Carillion’s collapse.

He said: “Network Rail have worked quickly to ensure the work will continue, work to make sure staff carry on projects, make it clear subcontractors can carry on and will be paid.”

On Tuesday, Construction News revealed a letter from Carillion’s supply chain director confirming to Carillion’s suppliers they would not be paid for work it had completed before the liquidation.

Mr Grayling said: “On the railways and with Highways England, work is already taking place to migrate to other suppliers to make sure there is no hiatus; I am very confident that investment projects in the future will be derailed by what has happened.”

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