City Link administration: Unhappy New Year for 5,000 workers hit by courier firm's collapse

A van sits idle at a City Link depot in south London on December 27, 2014. British parcel delivery company City Link has gone into administration and temporarily suspended all operations (AFP/Getty)

Administrators of the failed parcel delivery firm City Link are preparing to axe 2,000 jobs on New Year’s Eve and the total number of workers impacted could reach almost 5,000, the RMT union has warned.

The union’s bombshell came following weekend meetings with Ernst & Young after its owner – the venture capitalist and Conservative donor Jon Moulton’s Better Capital – called in administrators on Christmas Eve. Most of the company’s 2,700 permanent staff discovered the news on Christmas Day. With no buyer found, the business will be closed within weeks.

An RMT spokesman said: “They’re only going to retain a skeleton staff for a few weeks to run down the operation. The 2,000 jobs on New Year’s Eve are going to be across the piece.

“They’re going to do a firesale of whatever assets they can realise. There are also 1,000 subcontractors, individual guys who’ve bought their own vans, uniforms – they are not going to get a penny piece and they’re owed thousands for working around the clock in the run-up to Christmas.

“If you look in the wider supply chain as well, the people who service the vehicles, the people who do the cleaning at the depots, the maintenance, the real figure – the real number of people affected by this – is closer to 5,000. It’s a big operation and there’s quite an extensive support network that goes with it.”

An E&Y spokesman refused to comment on the RMT’s warnings, but said that there “will be substantial redundancies over the coming days”.

“The administrators anticipate that a portion of employees will be retained for up to three months,” she added.

City Link struggled for years under its previous owner, the pest-control firm Rentokil Initial, whose management labelled it a “problem child” amid cut-throat competition in the parcel delivery industry. The firm sold it to Better Capital for £1 in April 2013, taking a £40m hit on the sale. Better Capital is itself likely to lose its £40m investment in the business.

The RMT has meanwhile called on the Government to intervene and nationalise City Link. “We want a meeting before the staff are made redundant, but Vince Cable [the Business Secretary] is saying he’ll meet us in the new year. That’s too late. We want to protect the maximum number of jobs we can, but we also want intervention because the way this has been handled is so diabolical it is only right that the Government should take an interest.”

An estimated million parcels are still believed to be stuck in City Link’s depots, which will open again today for customers to pick up undelivered goods.

Mr Moulton, who is worth some £225m, according to the Sunday Times Rich List, has turned around a string of struggling companies, but is best known for the failed bid for MG Rover in 2000 by his former venture capital business, Alchemy.

Better Capital also bought Reader’s Digest out of administration in 2010, but sold it for £1 in February after investing nearly £10m in a failed attempt to turn the business around.