SUBCONTRACTORS WORKING ON schools impacted by the collapse of construction firm Carillion have expressed concern they won’t get paid.
Last week it emerged that work had stalled on a number of schools after the UK-based firm went bust, with debts of £1.5 billion (about €1.7 billion).
Carillion was part of a consortium, Inspired Spaces, hired to build five schools and one further education college in Ireland.
The affected school buildings are in Carlow, Meath, Wexford and Wicklow. A number of contractors have expressed concerns about not getting paid as a result of the collapse.
A director of a company contracted to carry out work on two of the schools told TheJournal.ie: “We did work for both the Wexford and Wicklow schools amounting to about €10,000. We did the work last July and only partially received payment this week on one part of the project, but most of it is still outstanding.
It is very difficult for smaller businesses, like our own, to carry such amounts over for that length of time and we are still none the wiser as to whether we will be paid the full amount.
“Some businesses would be bigger than ours and have done more substantial works, while others could have invoices a lot smaller than ours, but it is difficult for any Irish business who have to manage a cash flow.”
The director said their company was contracted by another contractor and were unaware that Carillion was involved.
Nothing was ever flagged that the Carillion construction company was involved in the project and that it was in difficulties.
The director said it’s “worrying” that Carillion was awarded a contract for “important State projects” despite its financial difficulties.
“As a result, Irish businesses are now left in limbo unaware of whether they will be paid or not. These schools are State-owned and Irish businesses should be given clarity by the government as to where we stand.
“While there are rightly concerns about whether these schools will open, there are also many Irish businesses that are impacted by this too.”
Meath TD Thomas Byrne said subcontractors and local businesses in Kells have also been “left short numerous times by contractors and other subcontractors above them” and “are worried that this will become a major problem for them with Carillion going into liquidation”.
It’s understood that some subcontractors who haven’t been paid have walked off various sites.
Carillion, alongside the Netherlands-headquartered Dutch Infrastructure Fund (DIF), was hired under a Public Private Partnership (PPP) deal reached by the Department of Education and Skills and the National Development Finance Agency.
Yesterday, the UK’s Financial Reporting Council said it had opened an investigation into KPMG’s auditing of Carillion’s accounts from 2014 to 2017.
‘Livelihoods at stake’
One of the affected schools, Coláiste Ráithín in Bray in Co Wicklow, was due to receive the keys to its new building last week, after numerous delays. However, the Carillion collapse has pushed back the school’s opening once again.
A meeting of staff, parents, students and other stakeholders took place in Bray last night.
Speaking to TheJournal.ie, Aileen O’Reilly, chair of the school’s parents committee, said subcontractors not getting paid is “a huge issue”, adding: “Families and companies’ livelihoods could be on the line.”
O’Reilly said some parents have been campaigning for a new school for over 20 years and are “heartbroken” by recent developments.
She said parents understand the situation is complicated, given the numerous parties involved, but called on the government to intervene so the school can be opened while talks about its future maintenance continue.
They intervened for the banks, God knows. We’re just not going to sit down and take it.
O’Reilly said it’s “hard to swallow” that a brand new school is “only a mile up the road and can’t be used, while the children are squished in like sardines in substandard buildings, just hanging on”.
She said there are overcrowding issues on the current premises, which includes a number of prefabs, as well as heating and dampness issues, no wheelchair accessibility and “no sport facilities, no library, no canteen”.
“My daughter said it was two degrees in her English class last week, all the students had their coats on,” she noted.
O’Reilly said “pitiful” lockers for all 67 first year students are located in the same corridor, creating a fire hazard. “It’d be funny if it wasn’t so serious, all of them climbing over each other to get to their lockers,” she stated.
‘No end in sight’
Principal Gearóid Ó Ciaráin told us the opening date for the school has been pushed back numerous times.
“The original date being mentioned last May was late August to move into the new building. We thought we’d be in for the new school term. Then it was pushed back to November, then December, then January, and now things are up in the air.”
Ó Ciaráin said the current building is “very run down” and lacking facilities for Home Economics and sports.
The school enrolled a third first year class for the current academic year (instead of the usual two) as it thought it would be in the new building. However, as that hasn’t materialised, the school is working at maximum capacity (270 pupils) and cannot take in any new students.
“We took on extra classes and subjects on the assumption we’d be in the new building, we had to start planning last April so we could get teachers. We were planning in terms of what we could do in the new building.”
Ó Ciaráin said the current building opened in 1991 and four years later the then Education Minister Mary O’Rourke gave the then Bray VEC permission to identify a new site so the school building could be upgraded.
He said he and other shareholders are “very disappointed in how things have worked out”, adding that the situation has been ”very disruptive for the present academic year”.
“It’s worse when we don’t see an end in sight.”
Liquidation
When asked about the situation, a spokesperson for the Department of Education and Skills said the department, the NDFA and DIF “are all working to achieve completion and handover of all buildings as quickly as possible”.
“In accordance with international best practice, the PPP contract includes detailed provisions that apply in the event of the liquidation of a consortium member, or an entity under the contract, to ensure that the project proceeds to completion.
Subcontractors on the project are employed, either directly or through other subcontractors, by the PPP consortium, Inspired Spaces. It is a matter for all subcontractors to agree terms and conditions and a schedule of payments with their direct employer.
“The schools will be paid for by way of monthly Unitary Charge payments, and these will not commence until the schools are fully complete.”
Speaking in the Dáil last week, Education Minister Richard Bruton said: “There should not be significant delays in the execution of these projects given that they are 90% built … It should be mentioned that not only are the projects 90% built, but the State has not made any payment beyond a small element of site cost.
The only way in which the value to the developer can be obtained is if the State issues the licences. The State is in a relatively strong position.
“The NDFA is dealing with this issue and is determined to ensure that there will be no disruption to the work.”
The affected schools are:
A spokesperson for the NDFA told TheJournal.ie: “The estimated capital value of this contract is circa €100 million. To date, the State has made a payment of €4 million in respect of off-site works. The State is not obliged to make any further payment until the full works and services set out under the contract are being satisfactorily delivered for each school.
“Under the terms of the PPP contract, in the case of liquidation of a consortium member, or an entity under the contract, the PPP consortium’s funders and remaining shareholders are required to intervene and implement rectification measures to ensure the project is completed to the satisfaction of the State. Discussions between the parties to agree these measures are in progress.
In the event that these parties fail to reach agreement, the PPP consortium’s funders and remaining shareholders are obliged to determine alternative arrangements. The State has no exposure to any additional costs that may arise from this process.
An email sent from the Department of Education and Skills to affected schools, and seen by TheJournal.ie, states: “We recognize [sic] that this is a difficult and frustrating situation for you all and for everyone who wants to see the construction of these facilities concluded, in particular the school staff, students and their parents…
“We are seeking to ensure that the long-term interests and contractual rights of your schools and the State are protected. For example, it is essential that DIF ensures that the statutory building control inspection and certification process is correctly completed before the buildings are occupied.”
The email adds that “every effort is being made to minimise the impact of the situation on the opening of your schools”.
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