There’s been no escaping it – Carillion has been dominating the headlines following its collapse into liquidation last week.
The UK’s second-biggest builder entered liquidation on Monday after running up losses on contracts and racking up debt and pensions burdens of around £1.5 billion.
Carillion employs about 20,000 people across the UK, and was involved in several major projects in Scotland. Therefore, it’s great to see that the Scottish Government has set up helplines for anyone who may be affected by the failure of the construction firm.
The company, which has been struggling under £900 million of debt and a £590 million pension deficit, has seen its shares price plunge more than 70 per cent in the past six months after making a string of profit warnings and breaching its financial covenants. Lenders – including Royal Bank of Scotland, as well as HSBC, Barclays and Santander – are reportedly set to lose an estimated £2 billion as a result of the collapse.
Among many Scottish contracts, the company formed one third of the Aberdeen Roads Ltd (ARL) consortium, alongside Balfour Beatty and Galliford Try, which is delivering the £745 million Aberdeen Western Peripheral Route (AWPR). With 70 direct employees of Carillion working on the contract as well as about 190 employed on other terms, including some agency staff, the work will now have to be carried out by Balfour Beattie and Gallisford Try collectively, with no delays reported.
However, the firms have indicated that Carillion’s collapse now leaves a financial hole of £40-80 million in the project and that the Government would not be putting up any public money to fill the hole – that’s for the companies to discuss with the banks and lenders that are part of the consortium.
The construction firm is also involved in several infrastructure projects in Scotland, including the electrification of the central Scotland railway line and the extension of platforms at Edinburgh’s Waverley Station.
It also has several major contracts for managing public facilities, including West of Scotland Housing Association and is the second biggest supplier of maintenance services to Network Rail, and maintains 50,000 homes for the Ministry of Defence in over 83 military sites in Scotland worth £158 million.
The Scottish Government said it was in discussions with the liquidators and the UK Government regarding the measures they intend to put in place for private sector, Network Rail and UK government-backed contracts in Scotland to support Carillion employees and to secure the completion of these contracts.
That being said, both the judgement of the British Conservative Government and the model of governance through subcontracting has come under fire. Despite warning signs from Carillion last year, the government continued to award them over £1 billion of contract work in the UK since July 2017.
At this moment in time, it is unclear the extent of exposure in Scotland both for construction and facilities management projects across public sector. However, the union Unite has warned that it is set to take legal action, claiming that Carillion breached its legal obligations to give notice of redundancies and that they should have done this back in December. But for now, workers are being told “go to work, you will be paid”.
It is hoped that many of Carillion’s staff could ultimately be transferred over to whichever of the firm’s rivals ultimately pick up its former contracts.
Like so many others, I’ll be keen to see so many skilled workers quickly back in meaningful work – both for their sakes and that of the Scottish economy.
Nicola Sturgeon and the Scottish Government released a paper predicting the impact of Brexit on Scotland last week.
The report paints a pretty bleak picture for the country.
A hard Brexit would result in the Scottish economy being £12.7 billion per year worse off. Even the Scottish Government’s favoured option of retaining single market membership would cost the economy £4billion per year.
On the other side of the fence, a different figure is being bandied about. Scottish Secretary David Mundell said the UK internal market is worth £48billion to the Scottish economy – four times more than trade with the EU.
We’re now passed the halfway point. Around 18 months has passed since the UK made the decision to leave the EU and there’s just over a year to go before we formally leave.
I don’t know about you, but I don’t feel any the wiser as to what will become of our fantastic country post-Brexit. Making predictions can help prepare for any outcome, but there’s still so much up in the air with the UK’s deal unlikely to take shape until the autumn.
Sturgeon has said that she’ll be in a better position to decide if she should back a campaign for a second independence referendum by the end of this year.
Here’s hoping a picture of life after the EU in Scotland will become much clearer by then too.
It Made Me Laugh
Following the furore around Irn-Bru changing its top secret recipe, another Scottish brand has come under fire for tinkering with its recipe – only this time it turned out to be a hilarious hoax.
Buckfast bosses, J Chandler and Co, were forced to deny that they were reducing the alcohol content of the infamous tipple after a fake statement was posted on Facebook.
The post claimed the move was due to new Government laws, echoing Irn-Bru’s decision to reduce the sugar content ahead of the UK Government’s sugar tax which comes into force in April.
This latest bout of fake news left me wondering which Scottish brand will fall victim next. Perhaps Tunnock’s will have to reduce the amount of marshmallow in its teacakes!
It Made Me Weep
It’s great that so many children are more tech-savvy than most adults these days. It will no doubt stand them in better stead when it comes to getting a job.
I was, however, deeply saddened to read that a report has revealed 99 per cent of children aged between just six to 36 months use smartphones, tablets, computers or TVs every single day.
The British Psychological Society survey also stated that children aged between five and 15 years old spend up to 15 hours a day in front of a screen.
Technology has made it easy to occupy children and there’s a place for it in their education – but a better balance is needed to help ensure our future generation is happy and healthy.
