Carillion collapse throws schools/academies into disarray

20 Apr

On January 2018, Carillion, the Wolverhampton-based company founded in 1999, was liquidated.  The company which sponsored a Multi-Academy Trust in Thameside with two academies – Discovery and Inspire – also provided schools and academies in the country more than 32,000 lunches daily, facilities management (to 875 schools/academies), cleaning 245 schools/academies and maintaining the mechanical and electrical operations and fabric of 683 schools/academies.

Carillion began as a tarmac construction business, expanded its operations in the UK, spreading into Canada and the Middle East.  It diversified, taking on contracts like running the mailroom at the Nationwide Building Society to upgrading UK broadband for BT Openreach.  It took over public service projects from prison and hospital maintenance to cooking school meals.   The company designed and built 150 schools/academies. In 2017 £1.7 billion – 33.3% of its revenue – stemmed from state contracts.

Carillion employed 43,000 people.  More than 19,000 were in the UK.

In recent times it ran several contracts – such as the public-private partnership (PPP) at the Royal Liverpool University Hospital.  Its debts rose to £900 million.  Banks refused to lend it money when it needed a cash injection of £300 million. The soaring debts and the desertions of sources of income resulted in its liquidation.

Following the collapse, the government provided funding to maintain public services run by Carillion including the facilities management of schools/academies and the provision of school meals to them.  David Lidington, the Cabinet Office Minister, told the BBC: “Staff that are engaged on public sector contracts still have important work to do.”

Oxfordshire County Council took over the services Carillion provided and had the fire fighters on standby to feed 18,000 pupils in 90 schools and academies.  Barnsley Council, where secondary schools/academies were beholden to Carillion for caretaking, cleaning and maintenance services, ensured that it would assume the collapsed company’s responsibilities.

A spokesman for the Department for Education said: “Our priority is to ensure schools can continue to operate as usual.  We have planned extensively for this and have been working with local authorities and academy trusts since Christmas (2017) to make sure contingency plans are in place.  We are continuing to offer support (to) schools to help minimise disruption for pupils through our designated advice service.

Jon Coles, Chief Executive of the United Learning Multi-Academy Trust and former Permanent Secretary at the DfE, tweeted that he hoped the demise of Carillion would enable some schools escape “ludicrous” PFI deals.

The chief operating officer of the Carillion MAT in Thameside, Nicky Wise, made a public statement that discussions to separate began in July 2017 and were not connected to Carillion’s current predicament. “Having set up the two academies, Carillion provided a large amount of rigour and support. As soon as the schools grew and became well established, it became sensible for the trust to become more independent and work on its own.

“We had been looking at the relationship between the sponsor and ourselves and discussions started in September 2017 about moving away from Carillion’s sponsorship and changing the name of the Trust.  Members have taken that resolution and we don’t have any formal link with Carillion anymore.”

On 19 January 2018, Discovery Academy sent children home with a letter saying that the trust had taken steps to “decouple from sponsorship over the last few weeks” and the trust was now known as the Victorious Academies Trust.

Meanwhile, the Local Government Association representing 415 local authorities in England and Wales, said contingency plans had been implemented to ensure services were unaffected by Carillion’s liquidation.

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