Carillion was awarded key construction work on High Speed 2 (pictured) just days after its financial troubles came to light in July, and was also handed two contracts to upgrade the Midland Mainline for Network Rail in November.

 

“A serious investigation needs to be launched into the Government’s handling of this matter given that £2Bn worth of contracts were awarded in the time three profit warnings were made by Carillion,” said Labour’s Shadow Minister for the Cabinet Office Jon Trickett.

 

Former National Infrastructure Commission chair Lord Adonis took to Twitter to write that the Government has big questions to answer. He tweeted: “Why were they awarding contracts to Carillion after the exposure of its problems in July? What contingency planning did they do for the collapse? 20,000 jobs and huge projects at stake!”

 

Responding to criticism in the House of Commons, Cabinet Office Minister David Lidington said on Monday: “The majority of the small number of contracts awarded after the company’s July profit warning were joint ventures, in which the other companies are now contractually bound to take on Carillion’s share of the work.”

 

This includes work the company won on High Speed 2, for which Carillion formed part of the CEK joint venture with Kier and Eiffage. An HS2 spokesman said: “Work will continue as planned with no unnecessary or additional exposure to the taxpayer.

 

“The CEK joint venture has provided HS2 Ltd with assurances that in the event of any member of the group being unable to deliver on its responsibilities, the remaining members, now Eiffage and Kier, would fill the gap.”

 

David Lidington also said: “At the time when all those post-July 2017 contracts were bid for and awarded, Carillion met all the mandated tests, so it would have been, to put it mildly, a legal risk to have treated Carillion any differently from other bidders that were able to meet the tests.”

 

Government bodies including the Department for Transport, Network Rail, Highways England and local authorities are now activating contingency plans to ensure the ongoing delivery of Carillion’s projects.

 

The firm had been working on a number of important transport schemes including Scotland’s Aberdeen Western Peripheral Route and Highways England’s A14 upgrade and its smart motorways programme. It was also main contractor on the A6 to Manchester Airport relief road and the Lincoln Eastern Bypass.

 

Clients on these projects remain confident that the work will be delivered as planned.

 

A Highways England spokesperson said: “We have been monitoring the situation for some time and Carillion has kept us informed throughout. This has enabled us to develop contingency plans to ensure the continued safe delivery of any schemes that Carillion is involved in on behalf of Highways England.”

 

Regarding the Aberdeen Western Peripheral Route, a spokesman for Transport Scotland said: “We are working closely with the two remaining partners in the Aberdeen Roads Limited consortium to understand the impact of this announcement on those people employed by Carillion and, if any, on the AWPR/Balmedie to Tipperty project.

 

“We understand that Balfour Beatty and Galliford Try will now take the necessary steps to jointly deliver the remainder of this project.”

 

Lincolnshire County Council’s executive director for highways Richard Wills said that the authority’s Eastern Bypass Scheme, on which Carillion started main works this month, would still be built.

 

“There may, however, be some delay while we look at all of the options available with progressing the scheme – the most likely one being the appointment of a new contractor to manage and deliver the construction element of the scheme,” he said.

 

One senior transport industry commentator told TP Weekly News that Carillion’s collapse will cause “major disruption” to the sector and to the firm’s joint venture partners.

 

“Some clients may well look to re-let contracts, but among the mess there could be opportunities for others,” the source said. But he added: “The majority of big contractors are heavily dependent on supply chain contractors to deliver a lot of their work, so I suspect a lot of suppliers will be very nervous.”

 

It is thought that Carillion may owe its suppliers up to £1Bn in unpaid fees. Head of the Specialist Engineering Contractors Group Professor Rudi Klein commented: “The consequences of this massive collapse are going to affect all layers of the supply chain and there is a likelihood that small firms will not receive any outstanding payments.” He called for action to protect suppliers against the practice of cash retentions in the construction industry.

 

Workers union Unite added that workers and suppliers must be at the head of the queue for payment following Carillion’s collapse.

 

The move to liquidate the firm comes after it lost money on big contracts and ran up debts estimated to be in the region of £1.5Bn. Thousands of jobs are likely to be lost as a result of the firm’s collapse.

 

Institute of Directors head of corporate governance Roger Barker said: “We are still in the early stages of finding out what went wrong at Carillion. However, it is clear that major providers of public services must be governed in a prudent manner.

 

“This week’s outcome suggests that effective governance was lacking at Carillion, and we must now consider if the board and shareholders have exercised appropriate oversight prior to the collapse. Going forward, it may be necessary for Government to consider how it can better monitor the robustness of governance at key contractors.”

 

A CIHT spokesman said: “We will continue to monitor the ongoing situation in relation to Carillion. Government is providing detailed advice to those in the public sector. Our Learned Society & Technical Strategy Board is looking at the implications for our sector and we encourage any members who wish to become involved to contact us as we look to develop our activity.”