The Scottish Government has raised hopes that there will be no further delay to the completion of Aberdeen’s bypass following the collapse of Carillion – and that 260 affected jobs could be saved.
Economy Secretary Keith Brown said yesterday that “nothing” in the dramatic demise of the UK’s second largest construction firm “necessitates a delay” to the scheduled completion of the road by April, and that there was “a very good chance” the staff would be transferred to consortium partners.
Concerns were raised over the future of the Aberdeen Western Peripheral Route (AWPR) on Monday after Carillion entered liquidation just weeks before the £745million bypass was finally due to be opened.
The firm’s two consortium partners, Balfour Beatty and Galliford Try, are obliged to complete the scheme, but have witnessed their share price tumble after admitting they face taking an additional £80million hit on the project.
North-east Labour MSP Lewis Macdonald warned in Holyrood yesterday that the current “extremely serious” situation would become “catastrophic” if another of the three consortium partners was to fail.
It has emerged that Carillion owed £1.29billion to its banks when it collapsed, with difficulties in delivering the 36-mile Aberdeen road widely reported to have played a key role in its downfall, alongside two or three public sector contracts south of the border, and one in Qatar.
The north-east project, the biggest infrastructure scheme in the region for decades, has been hit by several delays and reported cost overruns, but under the terms of the contract the consortium does not get paid until it hands over the completed road.
Yesterday, Mr Brown was quizzed on the impact of Carillion’s liquidation after Aberdeenshire East MSP Gillian Martin secured a topical question in Holyrood.
Repeatedly pressed on whether it would result in further delays to the opening of the road, the minister eventually said: “Nothing in the change that has happened necessitates a delay.”
However, he added: “Of course, we will keep our eyes on further developments as they take place. Information is coming in to us all the time. We will continue to work with the contractors to ensure that we deliver the contract as it is stipulated.”
Speaking afterwards, north-east Liberal Democrat MSP Mike Rumbles said: “The Scottish Government is clearly hedging its bets and preparing for a delay to the project.
“If that is indeed the case, people and businesses in the north-east, especially those who could be negatively impacted, deserve to know how much longer they will have to wait.”
The SNP’s Ms Martin, however, said the minister’s remarks were “hugely reassuring” and that she would work “to ensure it remains on schedule”.
Mr Brown also revealed that “one or two” subcontractors on the AWPR project had been taken on by Carillion directly, with a helpline being set-up by Scottish Enterprise for any smaller firms who were concerned, but he said the “vast majority” were let by the consortium and would be unaffected.
More than 70 directly-employed Carillion workers and about 190 other staff, including those from agencies, are involved in the remaining stages of the bypass scheme.
Mr Brown, who was convening a meeting of officials to discuss the issue yesterday afternoon, said: “I do not want to be too definitive, but I think that there is a very good chance that they will be taken on by the other two members of the consortium.
“We are coming towards the end of the contract, so it might well be the case that all that resource will have to be there.”
However, John Clark, local representative for the Unite trade union, said the staff on site were only told they would be paid for the next two weeks.
“The bosses at the AWPR didn’t give any assurances after January 31 but it seems like Balfour Beatty and Galliford Try are going to be picking up the slack here,” he said.
Mr Macdonald questioned the impact of the AWPR contract on Carillion and the remaining partners, and the “catastrophic” consequence of another of the firms collapsing.
Mr Brown responded: “I make no bones about it: there is no information that suggests that the eventuality that Lewis Macdonald talked about will happen. Of course, if it were to happen, the remaining contractor would be responsible for taking things forward.”
At Westminster, meanwhile, Prime Minister Theresa May’s Cabinet was meeting as the fallout from the crisis continued to reverberate through the UK Government.
Labour leader Jeremy Corbyn said Carillion’s collapse was a “watershed moment” that should bring an end to “rip-off privatisation” of public services.
The group’s demise has also posed questions as to why Carillion continued to receive UK Government contracts despite issuing a number of profit warnings.
Asked whether it had been a mistake to continue awarding contracts to Carillion, the prime minister’s spokesman said: “Since July, we have kept a very close eye on this, but of course if there are lessons which can be learned, they will be.”