Nationwide CPO: Insourcing ex-Carillion services ‘the right thing to do’

30 January 2018

Bringing services formerly provided by Carillion in-house and securing jobs to those affected by the contractor’s collapse was “the right thing to do”, Nationwide’s chief procurement officer Laura Falkner has told SM

Nationwide and its procurement team are currently working to directly contract with the building society’s ex-Carillion suppliers, Falkner said.

Nationwide has already transitioned about 250 ex-Carillion contractors into the company’s property services department, which Falkner heads up.

In a statement announcing this on 18 January, Nationwide said: “Our contractors perform a vital and valued role for the Society. During an unsettling time for Carillion employees we felt it was important to provide them with some reassurance.

“We are today announcing a proposal to bring all services provided directly by Carillion in house.... This will provide clarity for those affected and ensure that services are maintained. 

“As part of the wider supply chain arrangements we will also now look to deal directly with third-party suppliers that currently support the Carillion contract.”

Falkner told SM: “We are now in day eight of our newly insourced service and all is going well. The team do such a valuable job for Nationwide that we all felt this was the right thing to do.”

She added: “My procurement team are also working to directly contract with the ex-Carillion suppliers.”

Nationwide estimates there are 1,500 members of staff engaged by separate third-party suppliers who worked on Nationwide contracts with Carillion, providing a range of facilities management services such as cleaning, maintenance and security.

Contractor Carillion announced its compulsory liquidation on 15 January after failing to find financial support and struggling under an estimated debt of £900m and a pensions deficit of £571m. 

Nationwide is not the only financial services firm offering support to those affected by Carillion’s collapse. Banking group Lloyds also announced it would provide a £50m emergency fund to help small businesses suffering cash flow issues following the company’s demise. 

Impact on construction industry

Figures released by construction industry analysts Barbour ABI have suggested that Carillion was the main contractor on projects totalling £5.7bn on the day of its collapse. That figure comprises 57 projects in total, including the £1.3bn HS2 project.

Ten of the projects were individually worth more than £150m, including Royal Liverpool hospital (£450m) and an Army basing programme in Salisbury (£340m).

Barbour ABI lead economist Michael Dall said: “Carillion were deeply embedded within the construction industry - they were the second biggest contractor in the UK by revenue… What happens to these projects is a matter for conjecture. If the reason Carillion went bust was due to under-bidding then it stands to reason that the financial terms will have to be renegotiated.”

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