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County council agrees exit deal with £10m+ payment after Carillion collapse

Oxfordshire County Council has formally terminated its contract with Carillion LGS Limited, following the collapse of the parent company last week.

Termination is effective from 1 February 2018, bringing forward the already agreed end of the contract which was set for the end of June 2018.

The county council made a net payment of £10.65m to Carillion to cover work already completed as part of the final settlement.

Since signing a ten-year deal with 2012 Carillion had provided services on behalf of Oxfordshire including school meals and cleaning; maintenance of council buildings; property services, and building work such as school extensions.

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“If Oxfordshire County Council had not struck the exit deal early and made the payment in December, weeks before liquidation, we would now be facing the prospect of lengthy litigation to end the contract,” the local authority claimed.

Cllr Lorraine Lindsay-Gale, Cabinet Member for Property, Cultural & Community Services, said: “We brought the process forward and legally terminated our contact and will be taking over those services to ensure continuity. Carillion’s financial problems were not the original reason we wanted to end the contract. But as the scale of the company’s problems became apparent we are very glad we ended the contract when we did.

“The reality is that if we had not ended the contract and settled with the liquidators, we would now be tied up in lengthy negotiations to end our involvement with the company. This early exit deal means we can get on with finding better ways to deliver services that Carillion provided.”

The parent company was put into liquidation on 15 January.

Carillion staff in the council’s maintained schools who contracted their services via the local authority will be transferred to the county under TUPE, and services would continue as normal, Oxfordshire said.

In summer 2017, the county council announced that it had agreed with Carillion to end parts of the contract, leaving only facilities management (maintenance, cleaning and school meals) which was due for a review.

“Following that review, we agreed with the company to end all remaining parts of the contract by 30 June 2018, and a payment was made to Carillion to settle all outstanding amounts due in relation to completed construction contracts,” the council said.

Services previously provided by Carillion to the county council will continue through a mix of bringing staff in-house (e.g. school meals, cleaning); continuing with suppliers (mainly catering), and working with existing sub-contractors (mainly construction and property services).

The local authority said that, “like every other Carillion customer”, it was now working out the most cost-effective way to complete work left unfinished by Carillion. “The county council will now take over direct responsibility for commissioning future construction work and service delivery.”

County council officers are also reviewing the uncompleted works under the Carillion contract and talking to sub-contractors about the best way forward.

See also: Post Carillion insolvency - what next David Kilduff, James Mills and Kate Webster chart a way forward for local authorities affected by the company's collapse.

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