Carillion in liquidation – what will it mean for schools?

The collapse of outsourcing-giant Carillion has left many schools concerned as to the effect it will have on the delivery of educational services, including the provision of school meals, the delivery of facilities maintenance and cleaning services. One county reported that fire-fighters were standing poised to deliver school meals despite the government's reassurance that Carillion's services would continue to be delivered with the assistance of public funding.

Wolverhampton-based Carillion, who called itself the 'integrated support services' business, announced it was entering liquidation last week amidst debts of £900m and a pension deficit of £590m. Carillion's services included delivering around 30,000 school meals a day, facilities management services in 875 schools and cleaning services at 245 schools.

As well as the provision of services, there are also concerns relating to debts owed to Carillion under its several public private partnership (PPP) agreements which can include private finance initiatives (PFI). These contracts sought to assist with funding by Carillion paying cash up-front for the design and construction of schools on the condition that Carillion would be repaid with interest over 25 years, with the ability to charge schools for the cleaning and maintenance services provided.

Schools may be assured to learn that these PPP/PFI contracts could now be sold on. Some have even commented that it may be an opportunity for schools to escape the unnecessary burden of the charging structure imposed by these types of contracts.

However, newly built schools or larger scale external works projects where Carillion entered into contracts with the local council may lose their 12-year protection against latent defects in the works carried out by Carillion.

A number of councils have now taken over many of the services previously provided by Carillion to schools and the Department for Education says it will offer support to schools to "help minimise disruption for pupils". The newly appointed Secretary of State for Education, Damian Hinds, has been urged to release further information on the impact of the collapse. 

We will continue to watch matters closely.