Local contractors hit as Viridor incinerator builders go bust

Our Sutton reporter, BELLE MONT, on the business collapse of the construction firm working on a £250m project at Beddington Lane

The construction firm which has been leading on the £250million build of the Viridor incinerator at Beddington Lane has gone into administration.

All fired up and ready to go: the Viridor incinerator at Beddington is almost completed

Initial reports on the Carillion-like collapse of Lagan Construction Group focused on the 200 jobs at risk at four companies based in Northern Ireland.

But here in south London, the collateral damage could spread far wider, as contractors on the Beddington Lane site were observed packing up their tools and equipment to leave, potentially unpaid by tens of thousands of pounds.

Inside Croydon understands that at least one contractor is owed £180,000 for work carried out on the incinerator site, and they fear that they may now get very little of their bill to Lagans paid off.

The construction of the incinerator was largely completed last year, and “hot trials” have been undertaken by operators Viridor since December. The operators still expect to fire up their industrial-scale furnaces later this year, as scheduled.

“Viridor is aware that four companies associated with Lagan Construction Group Holdings Limited are set to enter into administration,” a Viridor spokesperson said.

“Lagan Construction is a member of the joint venture construction team working on Beddington Energy Recovery Facility…”, they can’t bring themselves to utter the “I” word, “… in south London. Viridor has been consulting with CNIM, the lead member of the joint venture team, today. Beddington ERF is already in commissioning and no changes to the current timeline are expected.”

So Viridor are alright, Jack, with the reassurance of a £1billion publicly financed deal to burn rubbish for 25 years from the South London Waste Partnership – namely Sutton, Croydon, Merton and Kingston councils.

But reports from the site yesterday suggested that Lagan’s building workers were left, standing around idly, after managers had been recalled to Northern Ireland.

And Sutton- and Croydon-based building firms who had been carrying out work at Beddington for Lagans will face an anxious wait to discover how much of their work will not be paid for.

“Local sub-contractors are owed a lot of money,” Tim Crowley, the leader of Sutton Council’s opposition Tory group, said.

“You know, those local businesses that the LibDem  council said would benefit from the building of the incinerator.”

It is understood that a contributory factor in the demise of Lagan’s business has been costly over-runs of a number of schemes. A memo, seen by the BBC, said the business had been “significantly impacted” by delays and disputes involving several of its projects.

This may sound similar to the circumstances which saw the downfall last month of Carillion, the outsourcing and construction firm which had won dozens of public contracts by under-cutting rival bidders, but was unable to sustain its work in the face of rising costs and complaints from dissatisfied customers, who included Croydon Council over the running of the public library service.

In the Lagans case, the four companies impacted by administration are Lagan Construction Group Holdings Limited, Lagan Construction Group Limited, Lagan Building Contractors Limited and Lagan Water Limited.

In the memo to staff, published by the BBC, Michael Lagan, the head of the group, said: “The difficulties which have arisen within the Civils and Building divisions has meant that the directors of the affected four companies have no option but to immediately serve notice on the court to appoint an administrator.

“It is with great sadness and reluctance that the group had to take this course of action.

“Up to 200 employees may be affected by this announcement.

“I hope that some of those jobs could be transferred to joint venture partners whilst others may be relocated to divisions within the group.”

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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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