Q&A: What does the Carillion collapse mean for schools?

Q&A: What does the Carillion collapse mean for schools?

The stricken support services company Carillion went into liquidation today. How will schools be affected?

Hundreds of schools may be affected by the collapse of the support services business Carillion, which went into liquidation this morning. The government has pledged that services will still be delivered but in one county the fire service is on standby to deliver school meals.

What is Carillion and what has it got to do with schools?

Carillion describes itself as an “integrated support services” business.

It is a private business which works with the public sector to provide services ranging from delivering school meals to construction work on the HS2 rail project.

The business said this morning it had “no choice but to take steps to enter into compulsory liquidation with immediate effect” after talks failed to find a way to deal with the company’s £900 million debt and a £590 million pension deficit.

The company delivers more than 32,000 school meals a day, according to its website, as well as facilities management to 875 schools, cleaning for 245 schools and mechanical, electrical and fabric maintenance services at 683 schools, and has sponsored an academies trust. Carillion is also involved private finance initiative (PFI) deals with schools.

But the government says that less than 250 schools have direct contracts with Carillion.

Will school meals be delivered today?

The government has said that it will continue to deliver all public sector services following Carillion’s collapse.

But the Association of School and College Leaders says schools may want to confirm directly with their provider that services – whether meals or other work – will continue. “The government has announced that it will continue to deliver all public sector services following the insolvency of Carillion and this should mean that services provided to schools continue without any problems,” Julia Harnden, ASCL funding specialist.

“But we will be monitoring the situation closely and we will be talking to the Department for Education and updating members with any further information. In the meantime it would be useful for schools to confirm with their providers that there is no issue with any services.”

One local authority – Oxfordshire County Council – has said that it has taken over services provided by the company, including school meals, and has put the fire service on standby to deliver them.

Alexandra Bailey, Oxfordshire’s director for property, assets and investment, said: “We expect school staff will be in work as normal today but if this doesn’t happen we will provide school lunches to schools needing support, and the fire service are on standby to deliver them. We are confident no child will go hungry at school.”

Does Carillion run any schools?

The Carillion Academies Trust had two schools in the north west – Inspire Academy in Ashton under Lyne, Tameside, and Discovery Academy, in Hyde, Tameside.

But today chief operating officer Nicky Wise said that the link between Carillion and the trust had ended in the last few weeks.

On Friday January 12, Discovery Academy sent children home with a letter saying that the trust had taken steps to “decouple from sponsorship over the last few weeks” and the trust was now known as the Victorious Academies Trust.

“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,” Ms Wise said.

carillion trust letter

Is it involved in PFI deals?

Private Finance Initiative (PFI) contracts are a way of funding government spending by using the private sector to provide the money up front. Companies then make money by charging interest on repayments and from schools paying for services such as security, cleaning and maintenance.

But there has been concern about schools being locked into expensive PFI contracts.

Carillion is involved in several public private partnership (PPP) school projects which can include PFI. For example, in August 2009, the company signed a deal to provide design, build, finance and provision of facilities managements services for the Durham BSF (Building Schools for the Future) project – a £500 million scheme to upgrade the entire secondary school estate in Durham. It comprised over 40 schools, 11 of which were expected to be PFIs. The period over which payments were due to be made to Carillion for services was 25 years.

What happens to these deals now that Carillion has collapsed?

The contracts can be sold on. Carillion’s stake in six Exeter secondary schools which were built under a PFI project between 2004 and 2006 was sold in 2009 to Innisfree, a fund mangement company specialising in public private infrastructure projects.

And today Jon Coles, chief executive of the United Learning academy chain and former director general in the DfE, suggested that the end of Carillion collapse might mean a better deal for some schools:

What does all this mean for teachers and others working in schools?

Kevin Courtney, joint general secretary of the National Education Union, said: “Headteachers and other school staff face another strain on their excessive workloads as they try and make short-term contingency plans and new arrangements for the long-term, while Carillion staff working in and for schools will be anxious about their job security and their pensions.

“While the Government must protect the employment and pensions of Carillion’s public sector workers it must also take a long hard look at its encouragement of private sector involvement in schools and the unnecessary risks being taken with children’s education and wellbeing.”

There are calls from several other unions representing workers for reassurances over jobs, pay and pensions. Carillion employs 20,000 workers across Britain.

David Lidington, minister for the cabinet office, said: “For clarity – All employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do.”