HS2 says it sought assurances from troubled Carillion's joint venture partners as it defends contract award

Rebecca Smith
How HS2 will look at Euston once complete
How HS2 will look at Euston once complete (Source: HS2)

HS2 has defended the appointment of Carillion for a contract awarded today, saying it sought assurances from the construction firm's joint venture partners before confirming the announcement.

A spokesperson for HS2 Ltd said they had checked the firms involved remained "committed and able to deliver the contract" after Carillion warned on profits last week.

Earlier today it was announced that Carillion was successful as part of a joint venture with Kier and Eiffage to design and build part of the £56bn high speed rail link. It marked some welcome news for the construction firm after a torrid week where shares plummeted as Carillion's chief executive stepped down, and the firm said it expected to take £845m of writedowns.

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Carillion's shares rose nearly 21 per cent in the immediate aftermath of today's news, and at the time of writing were up 15 per cent at 66.95p, though still below the level before its profit warning of 191p.

The HS2 bid is underwritten by all three partners, and HS2 confirmed it sought extra commitment from the other two firms that they were still willing to go ahead on that basis.

A spokesman for HS2 Ltd said:

Obviously in the light of last Monday's announcement by Carillion, HS2 has carried out additional due diligence and sought re-assurance of both it and its two partners in the joint venture - Kier and Eiffage - that they remained committed and able to deliver the contract.

Each company's boards have both given that assurance and confirmed that they underwrite the performance of each other in delivering the contract. And that is the key point. HS2, of course, will continue to monitor the situation.

Also today, Carillion announced that EY had been appointed to help conduct a strategic review of the business with a "particular focus" on cost reduction.

Transport secretary Chris Grayling named Carillion's joint venture as one of a flurry of partnerships to win contracts building tunnels, bridges and viaducts between the capital and Birmingham for the first phase of HS2.

He also defended the choice of Carillion, telling Sky News that the firm was "part of a consortium - they're not alone in the contracts".

The expected total value of the contracts is currently estimated to be worth £6.6bn and create 16,000 jobs.

More detail of the second phase of the HS2 project linking Birmingham with Manchester and Leeds is also set to be unveiled today.

Read more: Carillion is one of the companies hired to build HS2

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