Carillion

Background

In 1999 Tarmac created Carillion as a separate company. Three years later Carillion's margins had risen 25%, making it a leader in road and rail contracting. Government contracts provided 60% of turnover. Carillion's 16 PFI contracts were worth about £130m and the forward order book reached £5bn.34

In 2000, Carillion made £41.9 million profit.(35) It is another long-time Tory backer that benefited from the rail sell-off. Like other rail privateers, Carillion has sacrificed safety for profit. In the wake of the Hatfield crash, the News of the World revealed a memo from Carillion subsidiary GT Rail Maintenance telling line testers to relax the rules on dents and cracks in the track:

'We are currently being inundated with defects of this kind...however it is not practical or cost-effective to cut all of them out of the track immediately when some of them can afford to wait until they are re-tested.'36

In 2003 Carillion lost £10m over its delays in the construction of the Nottingham light rail scheme and then had most of its rail maintenance work taken away (the shares plunged 16% as about £15m was removed from Carillion's 2005 operating profits in one fell swoop)37 as the Government tried to save face over the series of rail disasters by allowing the not-for-profit Network Rail to take maintenance in-house.

Despite Network Rail announcing that it would use its own staff rather than sub-contractors, Carillion found itself with £6bn to upgrade a main line in Cumbria, England. Months later, an unmanned runaway wagon careered three miles down a steep track where ten men were repairing track - killing four and hospitalising three. The wagon's brakes weren't working so it was secured by small pieces of wood despite carrying hugely heavy rails. The incident raised doubts as to Carillion's proclamation that:

'safety comes first and foremost for the public, the users of the railway and the staff and sub contractors who work on it. Everyone involved in the Carillion Rail structure is to ensure that we all keep that in mind, and remember "If it isn't safe then don't do it".'38

Carillion also had the honour of being awarded the first hospital PFI contract at Dartford and Gravesham General Hospital where it successfully cut beds from 451 to 400. The National Audit Office found that there had been no competition in awarding the contract - only Carillion had tendered - and the NHS Trust had considered the bid on incorrect figures. As a result the official financial watchdog concluded that 'there is uncertainty as to the level of savings, if any, that will be achieved'.39

New Labour ignored the lessons of Dartford and has given Carillion more hospitals to play with. For its part Carillion adapted to the new government, stopping donations to the Tories and hiring lobbying firm Shandwick. Shandwick in turn hired Colin Byrne, a former Labour party press officer and sidekick of Mandelson. In 2004, Carillion is selling its equity interest in the Darent Valley hospital PFI project thus raking in an £11m profit on a £4.1m investment. It expects its PFI portfolio to contribute £350m to next year’s sales of about £2bn.40 Hospitals and road PFI work remains strong and Carillion is preferred bidder on six projects. Earnings are expected to rise by nearly 10% this year and next.41

Key fracking dinner attendee

On 9 May 2013 Carillion's Director of Strategy and Investment, Peter Forsyth joined a dinner hosted by senior government officials Sir Jeremy Heywood and Stephen Lovegrove, Permanent Secretary of DECC at the Preston Marriott hotel in Broughton. Organised by the Office of Unconventional Gas and Oil the declared purpose of the dinner was 'to discuss the issues relating to the development of unconventional gas and oil in Lancashire and nationally'.

Notes

34'Unison Companies Update,' Unison, 09.04.03. See: www.unison.org.uk/acrobat/B798.pdf. Viewed: 26.01.04 35'They benefit from privatisation Fat cats who get PFI cream,' Socialist Worker, 25.08.01. See: www.socialistworker.co.uk/1763/sw176302.htm. Viewed: 29.01.04 36'What a carve up!' Solomon Hughes, Red Pepper, 01.05.01. See: www.redpepper.org.uk/natarch/solomon.html. Viewed: 28.01.04 37'Carillion keeps on the right lines after avoiding tram delays,' Philip Aldrick, The Telegraph, 08.01.04. See: www.money.telegraph.co.uk/money/main.jhtml?xml=/money /2004/01/08/cxquest08.xml&menuId=243&sSheet=/money/2004/01/08/ixfrontmarkets.html Viewed: 23.01.04 38'Call for public inquiry as runaway wagon kills four rail workers,' David Ward, The Guardian, 16.02.04. See: www.guardian.co.uk/uk_news/story/0,3604,1149013,00.html. Viewed: 16.02.04 39'What a carve up!' Solomon Hughes, Red Pepper, 01.05.01. See: www.redpepper.org.uk/natarch/solomon.html. Viewed: 28.01.04 40'Carillion keeps on the right lines after avoiding tram delays,' Philip Aldrick, The Telegraph, 08.01.04. See: www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2004/01/08/ cxquest08.xml&menuId=243&sSheet=/money/2004/01/08/ixfrontmarkets.html Viewed: 23.01.04 41'Carillion keeps on the right lines after avoiding tram delays,' Philip Aldrick, The Telegraph, 08.01.04. See: www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2004/01/08/ cxquest08.xml&menuId=243&sSheet=/money/2004/01/08/ixfrontmarkets.html Viewed: 23.01.04