Embattled Carillion and joint venture partners awarded HS2 contracts
Transport Secretary Chris Grayling defends giving embattled company along with Kier Construction and Eiffage Genie Civil the contract to run two sections of the London to Birmingham line
Philip Gates
The government expects the first phase of HS2 construction to be complete by 2026
Embattled Carillion has received a contract to build the UK Government's HS2 railway.
The company, which has announced accountants EY is to carry out a review of its operations, was given the contract to run two sections of the London to Birmingham line along with its joint venture partners Kier Construction and Eiffage Genie Civil of France.
The news helped Carillion's shares jump 10 per cent on Monday morning.
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Transport Secretary Chris Grayling said Carillion had been chosen because it was "part of a consortium".
He said: "They're not alone in the contracts, and we've had secure undertakings from all the members of the consortium that they will deliver that contract.
"So it's not where one businesses has to deliver, it's a group of businesses that have to deliver, and they've all committed to doing so."
He added: "My wish is that Carillion get through their current problems, but we've made sure that it's not an issue for these contracts."
Stephen Rawlinson, analyst at Applied Value, told the FT that the contract win was good news for Carillion.
However he added it would not solve the group's financial crisis.
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He said: "It's a cash crunch not a work crunch that the company is facing. It's a good example of Carillion winning the work they are good at but it won't solve their immediate problems because the cash does not flow until 2019.
"It's also won the contract in a joint venture so it hasn't got complete control over either the work flow or how cash is distributed." ]
More details of the HS2 second phase, linking Birmingham with Manchester and Leeds, will be unveiled later.
The Department for Transport said the first contracts would create 16,000 jobs and were valued at £6.6bn,.
The 2015 spending review put the budget for the overall project at £55.7bn.
But another estimate said the total cost could end up at a whopping £104bn.
Mr Grayling branded the estimate "just nonsense".
He added: "we are spending money on trying to make sure we have the best infrastructure and do it in a way that is as sensitive as possible."
Two contracts covering the tunnels and approaches to London's Euston Station were awarded to a joint venture between Skanska Construction of Sweden, the UK's Costain and Strabag of Austria.
For the Chiltern Tunnels and Colne Valley Viaduct section, a joint venture between VolkerFitzpatrick and Sir Robert McAlpine, both of the UK, and France's Bouygues Travaux Publics was chosen.
The contract to build neighbouring North Portal Chiltern Tunnels to Brackley and the Brackley to South Portal of Long Itchington Wood Green Tunnel was awarded to the Carillion, Kier Construction and Eiffage Genie Civil joint venture.
The final two sections — Long Itchington Wood Green Tunnel to Delta Junction and Birmingham Spur, and the Delta Junction to West Coast main line tie-in — were awarded to a joint venture between Balfour Beatty and three subsidiaries of Vinci, the French construction company.
The government expects the first phase of construction to be complete by 2026, and the second phase to begin in the mid-2020s.
HS2 chairman David Higgins said: "This is a huge day for the HS2 project and for the country.
"These contracts will support 16,000 jobs here in Britain and will create opportunities for thousands of SMEs.
"HS2 was always designed to be much more than just a high-speed railway and today we can see the opportunities it brings right around the country — spreading prosperity, acting as a catalyst for investment and rebalancing our economy 10 years before the railway even opens. Business now has the surety to invest with confidence to build a legacy for Britain."
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