More councils plan contingencies in case Interserve collapses

More councils are working up contingency plans in case Interserve collapses as the embattled contractor continues negotiations to ink an agreement with lenders over its latest rescue package. 

Last month, Building revealed that Sandwell council in the West Midlands, where Interserve is carrying out work on a number of schools for the authority, had asked Interserve to produce a ‘living will’.

Now, just a few weeks before shareholders vote on a debt-for-equity deal – which would see their stake in the firm reduced to 2.5% – Monmouthshire and Southwark councils have followed Sandwell’s lead.

Two comprehensive schools built by Interserve in the Welsh county were opened in 2017 and the following year but the firm is still remedying defects.

Interserve is also carrying out demolition work at one of the schools and in a statement Monmouthshire council said: “We are already working on contingency plans that would result in the council assuming responsibility for the demolition and the resolution of any outstanding defects.”

It added: “The council is holding retention funds on both projects which would enable us to step in with limited financial consequences.”

In Southwark, Interserve is working on a two-year FM job won last June – but the south London borough admitted that it is also concerned about the firm’s health.

Cllr Stephanie Cryan, a cabinet member for housing, told Building: “Southwark council has contingency plans in place that would enable it to continue providing services should Interserve become unable to do so.

”The council is able to draw on alternative contractors including specialists as well as immediately moving to in-house provision for some areas of work.”

The comments come as Interserve ploughs on with remedial works to a police custody suite in Leeds –  where completion is now expected next month, according to West Yorkshire police. 

The custody suite first closed in July last year for work on defects. The contractor is still due to begin remedial work on Wakefield custody suite for the West Yorkshire force once the Leeds suite is re-opened. 

Interserve has been contacted for comment.