Network Rail bars Carillion from new work

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The support services company Carillion has vowed to wipe out workplace accidents after Network Rail found that the company's contractors are twice as likely to be injured than those working for other railway maintenance firms. Network Rail has temporarily banned Carillion from bidding for any new business until its safety record improves.

Network Rail, the former Railtrack business, said it had been working with Carillion's rail unit to improve workplace safety but had been "disappointed with progress". It said it wanted Carillion to focus on improving its safety performance as opposed to winning new contracts.

A spokesman for Network Rail said that according to a survey, the average number of workplace injuries per 100,000 hours across the industry was about 0.25, whereas Carillion's average was double that figure. He said injuries ranged from relatively minor problems such as sprained ankles to head injuries. The spokesman said the ban on bidding for new work would stand until Network Rail was satisfied with Carillion's safety standards.

Carillion said it was disappointed with Network Rail's decision and that it aimed to wipe out workplace accidents altogether. It said that until recently, its rail business safety performance had been comparable to its rivals in the sector, but it had experienced an increase in "less serious workplace accidents" in June and July. The company attributed this to a restructuring of its rail business and reiterated its commitment to wiping out workplace safety improvements.

The company also emphasised that its rail business operates in a declining market and that it was only bidding on two new rail contracts. The rail business represents only about 5 per cent of Carillion's revenue compared with 25 per cent two years ago. That equates to about £250m a year amid overall annual revenue of about £4bn. Carillion said that Network Rail's decision to ban it from bidding for new business would have no material effect on the company's earnings expectations in 2006 or 2007.

Shares in Carillion rose slightly but some observers raised concerns about Carillion's future involvement in the rail support services business.

The rival support services company Balfour Beatty reported a decline in first-half revenue related to UK railways, but made bullish comments about its performance in the second half as work related to the track renewal programme for the London Underground and Heathrow airport gathered pace.