Contract for work on Paisley Town Hall agreed despite concerns

RENFREWSHIRE Council has rubber-stamped a contract for advance works at Paisley Town Hall, despite claims from councillors that taxpayers have been put at risk. 

Hub West Scotland has been given the go ahead as the main contractor for the first phase, with works being sub-contracted to Kier Construction. 

However, Labour councillors took issue with the involvement of Kier after the company experienced a fall in its share price due to a profit warning earlier this week. 

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Concerns were raised regarding claims the organisation has been involved in blacklisting in the past.

Councillor Jim Harte, the group’s finance spokesman, called on the council to “sever all ties” with the company. 

He did so in an amendment at Wednesday’s Finance, Resources and Customer Services Policy Board, which was deemed “incompetent” by convener Councillor John Shaw.

SNP administration Councillor Shaw said accepting the amendment wouldn’t be lawful and added: “We can’t sever all ties with a company.

“We’ve got a valid contract here that’s gone through a valid procurement process.”

At the beginning of the week Kier revealed it expected 2019 profits to be £25 million lower than previous expectations. 

This led Councillor Jim Sheridan to raise concerns about the future of the company. 

Warning of a potential “Carillion style situation”, he said: “We are concerned that Renfrewshire tax payers are being put at risk.”

Council finance bosses were quick to calm nerves, saying they felt awarding the contract did not pose a “major risk”. 

Cllr Jim Harte (left) and Cllr John Shaw clashed during the meeting

Alan Russell, director of Finance and Resources, said: “Poor results in relation to Kier’s financial year end resulted in a fall in share price, which is to be expected. 

“Kier remains profitable as a company. They have reduced their net debt position over the course of this year through their trading arrangements. 

“From our point of view in the short term they have the liquidity available to them, which shows they’re able to trade.”

Mr Russell continued: “They do have existing credit facilities with banks which extend through to 2022, which puts them in a significantly different position to Carillion.

“I know there are concerns in the industry more generally but I think specifically they’re in a different place to the one Carillion experienced.

“It’s not assessed as being a major risk.”

Councillor John Hood asked if the council was protected in the case of the company going bust during the refurbishment of the town hall. 

Bridget Lambert, strategic commercial and procurement manager, acknowledged it was “unlikely” that the company would go to the wall. 

But she said the council would be protected in that circumstance.

She said: “Under the agreement with the hub, they are obliged to go to their supply chain and appoint a replacement contractor.”

A spokeswoman for Kier said: “The group continues to perform well and we have this week updated our investors on current trading to confirm that we expect our FY2019 revenue to be broadly in line with the group’s reported revenue for FY2018.

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“All projects and contracts continue as planned.

“Blacklisting is contrary to Kier’s policy of conducting its business in a responsible and ethical manner. Kier does not condone blacklisting in any form.”

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