Government in crisis talks over company that provides vital services to schools

Government in crisis talks over company that provides vital services to schools

"Suggestions that Carillion's business plan has been rejected by stakeholders are incorrect", the firm said in a statement.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said it was likely the Scottish and UK Governments had been working on contingency plans since financial difficulties at Carillion first became clear a year ago.

It said the firm remained in constructive dialogue about short term financing while "longer term discussions are continuing".

The Wolverhampton-based firm's precarious finances are the focus of a meeting between the UK Government, pension authorities and stakeholders on Friday, which will attempt to negotiate a package to help it avoid collapse. It employs 43,000 people globally.

Notably, it holds a contract to build part of the forthcoming HS2 high speed railway line and is the second largest supplier of maintenance services to Network Rail.

Ministers from the Justice, Transport, Culture, Health, Education and Communities departments and ministries were also present, the Financial Times reported.

A government spokeswoman said it has been monitoring the situation to ensure its "contingency plans are robust".

"Handing Carillion bosses a blank cheque bail-out is completely unacceptable", Ms Azam said, adding that the company had an "abysmal" track record on protecting workers.

"The Government, who despite warnings carried on with its programme of outsourcing public services to this company, must stand ready to bring these contracts back into public control, stabilise the situation and safeguard our public services".

The GMB trade union called on the government to protect Carillion's workers and pensioners, but said the company should not be bailed out.

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In addition to its rail operations, Carillion also manages almost 900 schools, provides services to the NHS and works with National Grid.

The company held talks with its lenders and advisers in London on Wednesday.

The rescue plan shown to lenders on Wednesday includes handing back some loss-making contracts, revising the terms of others and potentially accepting financial support from the Government if it can not secure it from private sector sources.

A spokesman for the Scottish government said: "We continue to liaise with United Kingdom government colleagues to monitor and mitigate service risks associated with Carillion's financial situation".

A Government spokeswoman said: "Carillion is a major supplier to the Government with a number of long-term contracts".

Cabinet Office minister David Lidington hosted the summit of senior figures including Business Secretary Greg Clark and Chief Secretary to the Treasury Liz Truss.

Carillion, which has had to contend with a slowdown in many of its major markets, has seen its share price plummet from 230p a year ago to less than 15p on Friday.

Carillion has a pension deficit of roughly £580m, although this figure would be expected to rise sharply if measured according to the cost of insuring its various retirement schemes on a full buyout basis.

"We will not comment further unless it becomes appropriate to do so".

The pensions regulator would not comment on whether it was attending specific meetings, but a spokesman said: "We have been and remain closely involved in discussions with Carillion and the trustees of the pension schemes as this situation has unfolded".

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