Carillion’s health and the industry’s safety

For nineteen years, Carillion has been a titan of the UK construction and services industries. Even people who didn’t know the company knew its work. Carillion has had a hand in many of the UK’s most prestigious projects: The redevelopment of Manchester Airport, the construction of the new Midland hospital in Birmingham, the expansion of Liverpool’s Anfield Stadium, the building of Tate Modern and the development of High Speeds 1 and 2 to name just a few.

Yet the bigger the company, the harder its fall. On 15th January, Carillion confirmed that it had filed for liquidation after running up huge debts of around £1.5bn. 

Carillion had its fingers in so many pies that its obliteration has shaken just about every industry and sector in the country.

Its collapse will have major ramifications for the 20,000 people employed by the company in the UK, many in the health and safety sector. On 5th February, the Official Receiver confirmed that more than 800 workers are to be made redundant. However, the Receiver also announced it has now safeguarded another 100 jobs, mostly linked to public sector contracts on top of the 900 confirmed were safe at the end of January.

There are still concerns around their pensions, as Carillion has a pension deficit of almost £1bn. In addition, hundreds of sub-contractors have been left unpaid. Balfour Beatty, which had three joint ventures with Carillion, has already prepared itself for a £45m hit.

Carillion's “race to the bottom” approach to bidding for new business has attracted much of the attention in the national news, but there are other lessons to be learned as well. 

Health and safety record

The company had plenty of dealings with the powers that be in the health and safety sector. It was fined in early 2016 for breaches of health and safety laws that led to the death of a railway worker. Three years prior to that, it was punished for placing roadwork signs in unsafe locations after a motorcyclist crashed into one and was left permanently paralysed. It has also been fined more than once for falls from height.

Then there was the case of Dave Smith. Smith was headline news after he revealed that he had been blacklisted by the construction giant. After complaining about health and safety practices, as well as asbestos concerns, on Carillion sites, he found himself unable to get employment after years in the sector. Smith is now concerned that the collapse of the company means he will never see those who wronged him face justice.

Of course it wasn't all bad news. Carillion was recognised more than once for its health and safety successes. In 2016 it won an International Safety Award from the British Safety Council, becoming one of just 30 organisations to receive a distinction in the awards. The year before it secured a Gold Medal from the Royal Society for the Prevention of Accidents in recognition of nine consecutive Gold Awards. 

Business model

There are concerns that other companies could head the same way as Carillion. Amidst the danger of a domino effect, experts and unions are arguing that the business model employed by Carillion must be avoided going forward.

Outsourcing goliath Capita has run up a net debt of over a billion pounds and has a pensions deficit approaching £400m. Experts are blaming Capita’s aggressive acquisition, designed to drive growth, for the company’s problems. There are hundreds of people employed in Capita’s health and safety consultancy practice, which offers fire safety, legionnaires, asbestos and CDM consultancy. Fortunately for them, the above experts think that Capita’s service-based contracts, and bigger emphasis on the private sector, are a safer bet than Carillion’s construction equivalents.

Carillion's financial collapse might have grabbed the headlines since the turn of the year, but once the dust settles the company might serve as an example of how not to operate in a great many areas.