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Carillion crisis: What will firm's collapse mean for Midland Met Hospital and Paradise developments?

By Simon Penfold | Business | Published:

Work on two of the region's biggest building projects appears to have ground to a halt today in the wake of the Carillion liquidation.

What is the future for the Midland Metropolitan Hospital?

The company is one of the main contractors working on the £700 million Paradise redevelopment in Birmingham city centre, but work stopped this morning as news broke of the collapse.

It is unclear who will now pick up the job of completing Carillion's work on the first phase of Paradise, including the completion of One Chamberlain Square and the surrounding infrastructure work.

Around 100 jobs had been created by the work.

The fate of those workers is not known.

Contractor BAM is due to start work on the second Chamberlain Square building next month.

Will the collapse of Carillion affect the Paradise development in Birmingham city centre?

Rob Groves, regional director of Argent, the development managers for Paradise Birmingham said: "Our strong relationships with the supply chain and main contractors along with a robust contingency strategy means that we are confident that One Chamberlain Square will not be adversely affected.

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"The site wide works are now over 80 per cent complete and BAM will be on site in February starting construction of Two Chamberlain Square as programmed.

“We have had an excellent relationship with Carillion, having partnered with them for more than 25 years on many projects and our thoughts are with their staff today who are not just colleagues but friends.”

Meanwhile in Smethwick a skeleton crew of workers was manning another major Carillion building project - the £350 million Midland Metropolitan Hospital.

No construction work appeared to be under way with just 10 people appearing to carry out maintenance work across the site.

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Work appeared to be at a standstill at the hospital site in Smethwick

In a statement Toby Lewis, chief executive of Sandwell and West Birmingham Hospitals NHS Trust, said: “We regret this morning’s announcement concerning Carillion, who are the constructor for our long awaited new hospital, which is almost complete.

"We are working closely with HM Treasury and The Hospital Company as alternative arrangements are put in place to ensure that the construction of the Midland Metropolitan Hospital is completed.

"People working for Carillion are part of our local community and we will want to do anything that we can do to support their needs and futures at this difficult time.”

The hospital is already nearly a year behind schedule because of problems with the building work. It is not clear whether this latest crisis will add to the delays.

Meanwhile both Network Rail and Highways England have said Carillion's workers were on site at projects up and down the country this morning. Both said they had contingency plans in place in case of problems with the construction group.

Carillion also looks after 50,000 Ministry of Defence homes and 360 defence sites including armouries. Its joint venture partner in the work, Amey, has taken over,

Amey said: "The terms of the joint ventures’ arrangements mean that Amey will continue the services now that Carillion has announced it is entering into immediate compulsory liquidation.

"Amey is committed to doing this and ensuring continuity of service to the DIO and MOD and the service men and women in the UK.

"For the past few weeks, Amey has been working on detailed contingency plans with the DIO and the Cabinet Office to ensure it can effectively continue to manage the contracts and these are being implemented today.

"Amey confirms it is fully prepared to continue the service obligation of the contracts without adverse effect on the employees of the joint ventures or the supply chain."

But concerns are rising over the impact of the Carillion collapse on the 7,000 companies in its supply chain, from one-man-bands to firms employing hundreds, if not thousands, of workers.

There was uncertainty for the future of Carillion

Mike Cherry, the chairman of the Federation of Small Businesses and a Staffordshire business owner, said: “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees.

“These unpaid bills may well go back several months. I wrote to Carillion back in July last year to express concern after hearing from FSB members that the company was making small suppliers wait 120 days to be paid.

WATCH protestors make their voices heard outside Carillion today

Protestors make their voices heard outside Carillion's Wolverhampton HQ

“Sadly these kind of poor payment practices are all too common among some big corporates. Perhaps if they weren’t it would be easier to spot the warning signs of a huge company in financial trouble.

“When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses.

"Public procurement must be much more small-business friendly, in which it is easier for small firms to navigate the system and the Government should prioritise meeting its target of at least one third of taxpayer-funded contracts going to smaller firms.”

Simon Penfold

By Simon Penfold
Business Editor - @SPenfold_star

Business Editor based at the Express & Star's head office in Wolverhampton, looking for stories big & small.

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