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Cash-strapped Carillion can’t pay their library paper bills

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Carillion, the building company which somehow landed the contract to run Croydon’s public libraries, is so strapped for cash that they have unpaid bills from their suppliers for use of photo-copiers and paper.

Carillion is a construction company which was seeking juicy profits by grabbing outsourced libraries

The value of the company’s shares plunged a further 30 per cent this morning, as the troubled firm issued the latest in a series of profit warnings and trading updates.

Carillion announced to the London Stock Exchange that it is to try to recapitalise, it downgraded profit expectations, and revealed higher than anticipated debts and said it expected to be in breach of covenants – agreements to pay loans – by the end of the year.

Carillion’s problems relate mostly to its construction business, but it is having a knock-on effect to the subsidiary which is running Croydon’s and other local authority libraries.

The state of the business prompted one City analyst to say this morning, “The Carillion horror show continues.”

Nicholas Hyett, an equity analyst with Hargreaves Lansdown, having reviewed the company statement, said, “The group has made some progress on asset sales, and it sounds like some cost savings are being made. It’s not what the group expected though, and it’s clearly not enough.

“It’s also probably irrelevant given the state of the balance sheet, with net debt already many multiples of the group’s market capitalisation.”

That’s not good news for Croydon’s libraries. There have already been a string of complaints from residents and councillors about the lack of proper maintenance of the buildings or the book stock. Now, printers and copiers in the borough’s public libraries are not being serviced if they break down, because of the unpaid bills with suppliers.

Carillion took over the running of Croydon’s 13 public libraries at the end of 2013.

The then Tory-run council had run a bungled privatisation programme. After handing the contract to their mates at a subsidiary of John Laing (the construction firm that built the council offices at Fisher’s Folly at vast expense), it then got shovelled off to Carillion – who had never participated in the formal tendering process. Within weeks, Carillion were laying off experienced and valued library staff.

Carillion’s poor service in local authority libraries has already seen then sacked by Hounslow, which has taken its library service back in-house, something which Croydon’s cabinet member for art and culture, Timothy Godfrey, is keen to do here. But sources at the Town Hall suggest that all moves to cancel Carillion’s contract – which has three years to run – are being resisted by the council’s “we know best” professional staff.

Last month, Godfrey said that our libraries’ front-line staff and local management “don’t get the support that they deserve” from Carillion.

“If they do collapse then we at Croydon Council will keep the libraries open and transfer all the front-line staff back to the council.

“In the meantime, the residents of Croydon get a sub-standard service and not the libraries we all deserve.

“Carillion are hanging on to their library contracts – three boroughs are left after they lost the contract to run Hounslow libraries. Croydon’s contract has three years left to run, and the council is worried that if it ends the contract early then it will have to pay compensation to Carillion.

“As a result of Carillion losing their Hounslow contract, our online library lost book stock, which we have been promised will be replenished at no cost to Croydon Council.”

Things must be tough for Carillion now, though, if they are so short of cash that they are failing to pay their bills in Croydon’s libraries. Yet again, it is the front-line staff and the library users who are suffering as a consequence of Tory austerity efforts at cost-cutting, rather than taking real pride in delivering outstanding public services.


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