Carillion, The UK's second largest construction firm, has gone into liquidation, putting thousands of jobs at risk.

The company is involved in numerous public sector contracts, including the management of prisons, schools and 50,000 Ministry of Defence homes.

It is also one of the prime contractors for HS2, the high speed rail link being built to connect London with Birmingham, Leeds and Manchester. It is a principle construction contractor for Network Rail.

43,000 staff are employed by Carillion worldwide, 20,000 of whom are based in the UK.

Thousands of smaller companies are also contracted by Carillion.

The impact on jobs and contractor firms is not yet clear.

It is understood that much of Carillion's substantial public sector work will be brought back under government control, or contracted out to other companies.

The government has been criticised for awarding public sector contracts to the firm in recent months, despite the company's woes being well known. The firm issued three profit warnings in six months.

Sources suggest the government was keen to assuage the worries of substantial lenders by handing it large contracts.

Having refused to insure Carillion's debt, the government knew the only likely result would be liquidation.

The government does not want to be seen as privatising profitable businesses, while nationalising unsuccessful ones.

What's the immediate impact?
  • Carillion provided construction services for Network Rail, which says that day-to-day running of train services will be unaffected.
  • Oxfordshire County Council has taken back control of schools formerly run by Carillion. It has stated the fire brigade is on hand to deliver school meals if necessary.

Bernard Jenkin, the Conservative chairman of the House of Commons Public Administration Committee, said Carillion’s liquidation "really shakes public confidence in the ability of the private sector to deliver public services and infrastructure".

Mick Cash, the general secretary of the Rail, Maritime and Transport (RMT) union, said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain.

"RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our member’s jobs and pensions."

Rehana Azam, national officer of the GMB union, said: "What's happening with Carillion yet again shows the perils of allowing privatisation to run rampant in our schools, our hospitals and our prisons."