Questions remain over future of key Sunderland sites after Carillion’s collapse

The former Vaux Brewery site viewed from St Mary's car park.
The former Vaux Brewery site viewed from St Mary's car park.

The future of key projects across Sunderland remains uncertain after the construction firm involved went into liquidation.

Siglion, which is a partnership between failed firm Carillion and Sunderland City Council, is responsible for the redevelopment of the Vaux site in the city centre, the regeneration of Seaburn and a housing site of 750 earmarked for Chapelgarth, a plot of land near Doxford Park.

Conservative group leader Councillor Robert Oliver.

Conservative group leader Councillor Robert Oliver.

It is also responsible for Houghton Business Centre, Pennywell Business Centre, River Wear Commissioners Building, The Place, Stanfield Business Centre as the company also owns a number of industrial units and retail units across the city.

There are two other sites, Farringdon, also in the city centre and neighbouring the Vaux plot, and Numbers Garth, which are not active developments.

The fears come as Carillion went into liquidation after it ran up debts of £1.5 billion.

The deal between the firm and the council was drawn up in 2014, when it said it had agreed a joint venture to redevelop key sites across the city, with the contract at that stage said to be “potentially worth up to £800 million to Carillion over the 20-year life of the regeneration programme.”

Today’s news that Carillion has gone into liquidation is worrying for Sunderland.

Councillor Niall Hodson

Both Siglion and the Labour-led council have been approached by the Echo for comment, but are yet to respond.

Carillion also runs a training service based in Deptford Terrace in Sunderland.

City Hospitals Sunderland NHS Trust has said it is not affected by the collapse of Carillion.

Julie Elliott, Labour MP for Sunderland Central, has said she is on her way to the House of Commons, where a statement is due to be given by the Government this afternoon.

Liberal Democrat Councillor Niall Hodson in front of the Farringdon Row site in Sunderland city centre.

Liberal Democrat Councillor Niall Hodson in front of the Farringdon Row site in Sunderland city centre.

Concerns have been raised by the city’s Conservative and Liberal Democrat members after they previously sought reassurances about the partnership as the viability of Carillion was called into question.

Councillor Robert Oliver, Tory leader of the party’s members on the council, said: “Sunderland Conservatives have been highlighting the position the joint venture with Sunderland Council for some time and now urge the council to make clear the contractual arrangements so residents are reassured about the future of the Vaux site and Seaburn.

“This may be an opportunity to reassess the proposals for key locations in the city and take onboard the concerns of many residents especially at Seaburn where there is an important debate regarding the proposed mix of housing and leisure at the seafront.

“The Vaux site was purchased through government money but there have been concerns at the slow progress of lettings at the first building on the site through the Siglion joint venture and especially the cost of the ‘Launch’ sculpture.”

Leader of the Liberal Democrat group, Niall Hodson, said: “Today’s news that Carillion has gone into liquidation is worrying for Sunderland.

“The council has tried to offer some reassurance that it is protected legally and financially from the collapse – but it has been alarmingly short on specifics.

“This will undoubtedly have an impact on the works on the Vaux site, the future of Siglion as a joint venture between the council and Carillion, and its regeneration plans in the city.

“Liberal Democrats in Sunderland have long been raising concerns that the council’s relationship with Carillion has been a little too cosy for it to take serious action.

“Other councils have acted much more firmly: last July, Oxfordshire County Council cut short a ten year contract with Carillion, after the emergence of information about the parlous state of its finances.

“What we need to see now is Siglion open its books and let local people know if city assets are at risk from this collapse.”

GMB, Britain’s general union has called on Prime Minister Theresa May to act immediately to take Carillion contracts into public ownership after the company went into liquidation today.

The union called for a full and transparent inquiry into the provision of public services by private sector contractors once jobs and services were secured.

Tim Roache, GMB General Secretary said: “The Prime Minister must act right now to bring Carillion contracts back into public ownership.

“That is the only way to safeguard the jobs and services this mess has put at risk.

“Merely propping up this botched shell of a company is not a secure or stable solution for our public services. It’s high time we brought this vital work back in house.

“Despite months of profit warnings, ministers have failed to prepare for the collapse of Carillion, which has plunged workers into crisis today.

“The Government has continued to spoon-feed the company taxpayers’ money by awarding them yet more contracts. Ministers should be hanging their heads in shame today - it’s a complete shambles.

“Carillion is the tip of the iceberg.

“Continued privatisations have mortgaged our future and services that we all rely on to profiteering companies.

“The minute jobs and services are secure, the Prime Minister must conduct a full and transparent inquiry into the provision of public services by private sector contractors with a view to taking them back under public control. What is unfolding at Carillion must never be allowed to happen again.”

Neil Harrold, chairman of R3 in the North East and a partner with Hay & Kilner Law Firm, said: “Whenever a large company becomes insolvent, there are consequences for the wider business community, particularly suppliers and sub-contractors whose own survival can be threatened by the loss of a large customer or source of work.

“It’s important to remember that liquidators are responsible to all creditors, and have an obligation to realise as much money for creditors as possible.

“They will do this by selling an insolvent company’s business or assets.

“Employees, creditors and suppliers of a company in liquidation should contact the liquidators for more information on their specific cases.”