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News archive - January/February 2018

Carillion fails financial examination

Carillion fails financial examination

The giant services contractor, which went into liquidation in mid-January with debts of £1.5bn, has been deeply involved in the education sector for over a decade, building and running 150 schools, some through PFI deals, as well as sponsoring its own academy.

Currently, post-crash, Carillion’s education involvement is mostly providing services such as school meals and facilities management – for which Government says it will pick up the tab while it attempts to find a replacement supplier by selling on Carillion’s contracts to other service providers.

School building frameworks

But the firm has also been involved in the Government’s school building programme and was on a number of framework partnerships. In November last year it was chosen as one of nine contractors to work on two lots on the Government’s school building framework.

At the time, Keith Cochrane, Carillion’s interim chief executive, said: “We are pleased to have re-secured our position on this framework, demonstrating that we continue to retain the confidence of key customers despite the group’s current challenges.”

As Education Design & Build went to press, it was unclear whether Carillion had been awarded any new schools contracts under these frameworks immediately prior to its collapse.

Carillion led a consortium in 2009 which won a £500m contract from Durham County Council to deliver its Building Schools for the Future project. It continues to supply facilities management support services to Shotton Hall Primary, the Academy at Shotton Hall and Sedgefield Community College. Additionally, it is in the final stages of groundworks for a proposed extension to Durham Sixth Form Centre, but the contract for the remainder of the work has not yet been awarded.

Carillion’s Academy

Until the start of the year, Carillion was also sponsoring and running the Carillion Academies Trust, which consisted of two primary schools in the North-east – Inspire Academy in Ashton under Lyne and Discovery Academy in Hyde. Inspire had been in existence since 2015 and had nearly 80 pupils; Discovery opened in September 2016 and had 24 pupils for its first year.

On January 16 this year, the day after Carillion’s collapse was announced in Parliament, Carillion Academies Trust officially changed its name at Companies House to Victorious Academies Trust. No details were given about any change in the ownership structure.

Interviewed on ITV News about Carillion’s crash, Discovery Academy Executive Head Teacher Karen Burns - who is also responsible for the management of the Inspire Academy and was on Carillion’s board overseeing the schools – said she had decided to move away from Carillion, citing the company’s profit warnings in 2017.

She told ITN: “It was a timely decision because with the profit warning they were stripping back to core business. I felt it was the perfect opportunity for us to move on with an educational focus without the commercial sponsorship.”

Chief operating officer Nicky Wise told the TES that the link between Carillion and the trust had ended in the last few weeks. She said: “We had been looking at the relationship between the sponsor and ourselves and discussion started in September about moving away from Carillion’s sponsorship and changing the name of the trust. Members have taken that resolution and we don’t have any formal link with Carillion anymore.”

Funding for the Carillion Academies Trust (CAT) came from two main sources: according to the latest annual report filed in August 2016, Tameside Metropolitan Borough Council gave £395,000 in the form of early years funding, rental income and pre-opening costs; the Education Funding Agency gave £360,000 in the form of annual general grants, rates rebate and the pupil premium.

Carillion itself provided a loan facility of £450,000, which was to be repaid by CAT over seven years. To date, £100,000 had been drawn down.