CONSTRUCTION giant Carillion has said it has "no choice but to take steps to enter into compulsory liquidation with immediate effect" after talks failed to find another way to deal with the company's debts.

The stricken company, which employs 20,000 workers across Britain, said crunch talks over the weekend aimed at driving down debt and shoring up its balance sheet had failed to result in the "short term financial support" it needed to continue trading while a deal was reached.

Carillion is a key supplier to the Government and has contracts in the rail industry, education and NHS.

The construction giant built the £22million Northern Inner Distributor Road between Staplegrove Road and Priory Avenue in Taunton on behalf of Somerset County Council but have been in dispute with the authority over the final bill after the road was completed more than two years late.

Bridgwater Mercury:
Carillion was a contractor on the controversial NIDR in Taunton

Philip Green, chairman of Carillion, said: "This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

"Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

"We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers."

Cabinet Office Minister David Lidington said: "It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.

"Since profit warnings were first issued in July, the Government has been closely monitoring the situation and has been in constructive discussion with Carillion while it sought to refinance its business.

"We remained hopeful that a solution could be found while putting robust contingency plans in place to prepare for every eventuality.

"It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.

"We understand that some members of the public will be concerned by recent news reports. For clarity - all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do."

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Unions have called for urgent reassurances over the jobs, pay and pensions of thousands of workers following the "disastrous" news.

Officials from several unions representing workers on the railways, construction sites, prisons, hospitals and schools are seeking information from the company and ministers.

Rail, Maritime and Transport union general secretary Mick Cash said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain.

"We have been warning since Thursday night that we thought the collapse of the company was imminent.

"The blame for this lies squarely with the Government who are obsessed with outsourcing key works to these high-risk private enterprises."

Jim Kennedy, the Unite union's national officer for local government, said a public inquiry was needed to answer questions about Carillion's conduct and the Government's decision to award it contracts.

Nicola Parish, executive director at The Pensions Regulator, said: "It is too early to comment on possible outcomes for the various pension schemes connected to Carillion.

"In the meantime, I would like to assure scheme members that the government set up the Pension Protection Fund (PPF) to support members of workplace pensions in precisely these circumstances."

Shares in Carillion have been suspended on the London market following the liquidation announcement.

Bridgwater Mercury:

Joe Giddens/PA Wire

Brian Berry, chief executive of the Federation of Master Builders, said: “Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise.

“Carillion’s liquidation raises serious questions for the Government, not least about its over-reliance on major contractors.

"The Government needs to open up public sector construction contracts to small and micro firms by breaking larger contracts down into smaller lots.

"That way, it can spread its risk while also reaping the benefits that come from procuring a greater proportion of its work from a broad range of small companies.

"Construction SMEs train two-thirds of all apprentices and are a sure-fire way of spreading economic growth more evenly throughout the UK.”

Commenting on the news today that Carillion has gone into liquidation, John O'Connell, chief executive at the TaxPayers' Alliance, said: "Despite the extremely well publicised financial difficulties Carillion has been experiencing in recent months, the government continued to award it contracts, disregarding its own risk management policies in the process.

"Some of the most lucrative have been those for HS2 and this episode further underlines the fact that the government isn't capable of delivering this white elephant at a cost anywhere close to the initial budget.

"The flagrant disregard for taxpayers' money is nothing short of scandalous.

"While an outright bailout has been ruled out, there will be a substantial cost to taxpayers of bringing contracts in house and re-tendering them.

"Those in government and the civil service responsible for this mess should be moved on before their misadventures cost taxpayers even more."

Richard Beresford, chief executive of the National Federation of Builders, added: “When a major contractor goes into liquidation, it highlights the importance of diversifying those to whom you award contracts.

"When a company does go into administration, those suppliers owed money in retentions are unlikely to be paid, even though they have already provided skilled services.

“Many large regional contractors miss out on work simply because they are not among the usual suspects.

"Let’s not forget that £10.5billion of the UK construction industry’s annual turnover is withheld in retentions by clients and large contractors from regional SMEs in their supply chain.”