• Home
  • About
  • 151 IMPACT AWARDS
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

Impact Awards –>
  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Leeds recovers £450,000 from Carillion bond

0
  • by Colin Marrs
  • in 151 News · Agent 151 · LGPSi · Resources
  • — 1 Feb, 2018

Leeds Town Hall. Photo: Leeds City Council

Leeds City Council is to recover £450,000 from an insolvency bond it put in place last year before awarding a cycle route contract with collapsed contractor Carillion.

Carillion went into liquidation on 15 January with debts of £900m and a £587m pension deficit, just three months after Leeds awarded the firm a contract to build phase one of its Superhighway City Connect 2 scheme.

However, Leeds has limited its losses on the project by reclaiming the “on demand” bond, which it insisted on in order to guard against any financial failure of Carillion.

Leeds City Council chief executive, Tom Riordan, said: “As part of the original contract for work on the Superhighway City Connect contract we made sure that public funds were protected by making it a condition that a bond was woven into the Carillion contract in the event of the contractor becoming insolvent.

“Consequently, we are in contact with the bank, HSBC, who provided the bond to confirm that Leeds City Council are calling-in the payment of the guarantee.

“We are also contacting the Official Receiver to let them know that as Carillion Construction Ltd has had a winding up order made against it, Leeds City Council are terminating the contract with them.”

A spokesman for the council said that it has now received the £450,000 from the bond, which it put in place with HSBC.

However, the council has still lost money on the contract, with the spokesman saying: “We were around 17% of the way into the contract and this was reflected in the amount that had been spent.”

With the original contract value of £4.1m, this means the council is likely to be around £250,000 out of pocket on the works due to the collapse of the company.

The bond, wholly financed by Carillion, will now be used to run another procurement exercise to deliver the project.

The council’s highways and transportation’s direct labour force and term contractor have worked on making the uncompleted works safe and reopened closed parts of the public highway.

Another £7m contract for outer ring road improvements has been withdrawn from Carillion, which had been selected as preferred bidder.

Meanwhile, Local Government Pension Scheme Funds have been assessing the fall-out from the collapse of the contractor.

According to UNISON, the company had scheme members in thirteen local government pension funds: Croydon, Durham, Ealing, Greater Manchester, Harrow, Hounslow, Nottinghamshire, Oxfordshire, South Yorkshire, Teesside, Tyne and Wear, West Midlands and West Yorkshire.

In a statement, the union said: “Under agreements with these funds Carillion should have agreed cover for contributions and pension deficit payments in case the employer went into liquidation.”

Jeff Houston, head of pensions at the Local Government Association, told pensions magazine IPE: “We don’t have all the data yet but early indications are that in the majority of cases Carillion was fully funded.

“Unless something unexpected pops up we therefore do not expect to see local authorities having to pick up any significant deficits as a result of this event.”

Get the Room151 Newsletter

Share

You may also like...

  • Graeme Muir: Lies, damned lies, and statistics Graeme Muir: Lies, damned lies, and statistics 18 Dec, 2014
  • Stephen Fitzgerald: Local authority survival strategies Stephen Fitzgerald: Local authority survival strategies 21 Nov, 2016
  • Landsbanki debt auction to free up council cash Landsbanki debt auction to free up council cash 30 Jan, 2014
  • MiFID II: CIPFA’s new web platform aims to ease the pain of compliance MiFID II: CIPFA’s new web platform aims to ease the pain of compliance 12 Oct, 2017

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 11 hours ago

    Impact Awards: Liverpool’s cafe culture and Warrington’s investment in homes: The CCLA/Room151 Impact Awards showcase  finance teams with a direct impact on their local communities and the environment. This week we spotlight Liverpool City Council’s… dlvr.it/RxJsKb pic.twitter.com/dEYpaz6HP0

    Room151 14 hours ago

    Doing something in #localgov #finance for housing or regeneration? Check out the 'Place Shaping' category room151.co.uk/impact-awards/… sponsored by @31tenConsulting in the CCLA/Room151 Impact Awards. #timetoenter !! pic.twitter.com/dU99vE6Wws

    Room151 1 day ago

    Doing something in #localgov #finance for Adult Social Care & Health? Check out the ASC&H category room151.co.uk/impact-awards/… sponsored by Fundamentum Social Housing REIT in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 1 day ago

    Doing something in #localgov #finance for the environment? Check out the 'carbon management' category room151.co.uk/impact-awards/… sponsored by @ACSLLP in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 1 day ago

    So what are the seven categories for the CCLA/Room151 Impact Awards? Here they are room151.co.uk/impact-awards/… #localgov #finance #outcomes

    Room151 1 day ago

    Why should LGPS be concerned about rising inflation?: The impact of the coronavirus pandemic, lockdown and wider economic uncertainty created  deflationary pressures which raise important considerations for the Local Government Pension Scheme writes… dlvr.it/RxF7Fs pic.twitter.com/JlcjROBIpz

    Room151 2 days ago

    JOB ALERT: LPFA Finance Director vacancy: London Pensions Fund Authority Finance Director and s151 Officer Competitive salary and benefits The largest Local Government Pension (LGPS) provider in London with around £6.5 billion of assets and 135[...] dlvr.it/RxBdJP

    Room151 2 days ago

    Richard Harbord: Further signs that local government finance is failing: The crisis in Liverpool and a fix for education budgets are further indication that local government finance is in need of a root and branch review. Even for those students[...] dlvr.it/Rx9PSV pic.twitter.com/sAanC2gEyu

    Room151 1 week ago

    Impact Awards: Finance helps launch school meals company and support business during lockdown: The CCLA/Room151 Impact Awards will showcase the way finance teams have a direct impact on their local communities and the environment. This week we spotlight… dlvr.it/RwnlF4 pic.twitter.com/AJhne1MVG4

    Room151 1 week ago

    "This work has made a vital, practical contribution to ensuring people have been supported through the pandemic." #impact #151awards #covid #s151 room151.co.uk/treasury/impac… #impactcasestudies #councilfinancemakesadifference

    Room151 1 week ago

    room151.co.uk/impact-awards/ #passiton #localgov #s151 #151awards pic.twitter.com/A0uO0dwBkM

    Room151 2 weeks ago

    Financial pressures loom for 2023 and beyond: Kate Ogden writes the government has addressed most of the short-term Covid-19 financial pressures facing English councils, but problems loom in 2022-23 and the years following. As we enter the[...] dlvr.it/RwfDsz pic.twitter.com/hpv2R09w75

    Room151 2 weeks ago

    Calling all #localgov finance officers and #s151s room151.co.uk/impact-awards/ It's the #151Awards Thanks to the @LGALocalism for helping us get the word out along with all the LA treasury societies. pic.twitter.com/Nkal9BrH1J

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Stephen Sheen: Closedown 2017-18 leaves little time to relax
  • Next story Spelthorne’s PWLB borrowing tops half a billion

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.