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HS2: Carillion wins share of tunnel work

By John Corser | Business | Published:

Wolverhampton's troubled construction giant Carillion is among the firms that have been awarded contracts for the building of phase one of the HS2 rail line, the Government has announced.

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The deals are worth £6.6 billion in total and will see tunnels, embankments and viaducts constructed between London and Birmingham with the work estimated to support 16,000 jobs.

A partnership featuring Carillion has been commissioned for two of the projects on the 190 km high speed line which will connect to the West Coast Main Line near Lichfield and is planned to open in 2026.

Keith Cochrane, interim chief executive of Carillion, said: "We are delighted that our joint venture, CEK, has been selected to deliver two of the three central contracts for HS2 phase one, the London to Birmingham section of the route, reflecting the strength of our joint venture. We look forward to working in close collaboration with HS2 to deliver this iconic project.

"Carillion is a leading supplier of infrastructure services with top two positions in both the UK rail and highways sectors, where we work in partnership with key customers, including Network Rail, Highways England and HS2. We expect the UK Government's objective of generating economic growth through investing in infrastructure to continue creating opportunities for us to grow our business in these core markets."

Carillion's share price tanked by more than 70 per cent last week after a profit warning and an £845 million write-off on construction contracts.

The CEK joint venture partnership consisting of Carillion, Eiffage and Kier, has been successful in its bid for the C2 and C3 design and build contracts.

C2 involves tunnels through the Chilterns to Brackley and is valued at £724m and C3 involves the Brackley to Long Itchington Wood Green tunnel and its value is £616m.

The lots are in two stages. Stage one will be a 16-month period to develop a design, a programme and a target cost for the construction of the works. Stage two is the construction of the main works and is expected to take between four and five years to complete.

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A spokesman for HS2 Ltd said: "Obviously in the light of last Monday's announcement by Carillion, HS2 has carried out additional due diligence and sought re-assurance of both it and its two partners in the joint venture - Kier and Eiffage - that they remained committed and able to deliver the contract.

"Each company's boards have both given that assurance and confirmed that they underwrite the performance of each other in delivering the contract. And that is the key point. HS2, of course, will continue to monitor the situation."

Costain and Balfour Beatty are among the other UK groups to win work and a number of foreign firms were successful in bidding for the HS2 contracts, including Swedish-based Skanska, French company Bouygues Travaux and Austria's Strabag.

High-speed trains are expected to begin operating between London and Birmingham in 2026.

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Transport Secretary Chris Grayling said: "This is a hugely important step in the construction of Britain's new railway and underlines this Government's determination to deliver an economy that works for all.

"HS2 will deliver vital links between some of our country's biggest cities, helping to drive economic growth and productivity in the North and Midlands.

"As well as providing desperately needed new seats and better connecting our major cities, HS2 will help re-balance our economy.

"We will now get on with building the railway, while continuing to ensure affected communities get appropriate support and are treated with fairness, compassion and respect."

Opponents of the £55.7 billion project claim it will run over budget, create havoc during construction and have disastrous environmental consequences.

Joe Rukin, of the Stop HS2 campaign, said: "The case for HS2 has been invented by the very cheerleaders who intend to rake in billions of taxpayers' money which is desperately needed elsewhere, so it really is time to ditch this gigantic white elephant before it is too late."

In February, Parliament granted powers to build the first phase of the line, which will see trains travel at high speed between London and Birmingham before running on from Birmingham on the existing West Coast Main Line.

Preparatory work has begun and major construction projects are due to launch in 2018-2019.

Mr Grayling will soon publish a Bill to deliver Phase 2a from the West Midlands to Crewe, with services expected to begin in 2027. Phase 2b from Crewe to Manchester, and Birmingham to the East Midlands and Leeds, is due to open in 2033.

Business leaders in Greater Birmingham hailed the awarding of the contracts as another huge step forward for the HS2 project.

Greater Birmingham Chambers of Commerce chief executive Paul Faulkner said: “It’s great to see the main works civil contracts being awarded for phase one of the project. Not only will construction of the project start on time, it will also create a raft of new jobs and supply chain opportunities for our local firms."

John Corser

By John Corser
Business Reporter - @JohnCorser_Star

Express & Star business reporter at head office, Wolverhampton. Welcomes all news of companies and business organisations.

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