Washington shutdown hits thousands of staff at British contractors

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The Independent Online

Around 2,000 employees of three of Britain's biggest companies have been prevented from working as a result of the US Government shutdown.

Defence giant BAE Systems revealed yesterday that 1,200 staff in the US were unable to take up their posts since the stand-off between the Republicans and Democrats reached crisis point on 1 October. They have also not been paid since the end of last week – though they will still receive benefits for 90 days – and join more than 800,000 US government employees who have been furloughed until a 2014 fiscal budget is agreed.

The Independent can also reveal that security giant G4S, which guards prisons and nuclear power stations in the US, has 200-400 personnel not required at work. Serco, which has US army communications and patent contracts, also has "a few hundred" staff who are unable to work, according to a spokesman.

It is understood, though, that the G4S staff are still receiving their full contract entitlements and most of Serco's effected employees are being paid as usual.

BAE made the admission in a trading statement yesterday, saying the US shutdown had resulted in staff at its intelligence and security and support solutions businesses being "temporarily directed not to report to work".

This follows an email to staff on Sunday from BAE's US chief executive Linda Hudson. She said: "Our company is taking extraordinary steps to minimise the impact to our business and mitigate the effect on employees. We have continued to pay workers unable to access customers sites during the past week. But these efforts can't continue forever."

A spokeswoman confirmed the pay freeze, but added that events were "fluid", with 400 staff being required to work when BAE thought that they would be prevented from doing so.

The difficulties for BAE and G4S underline how the political deadlock on Capitol Hill over the President's Obamacare health programme is reverberating beyond Washington. "Whilst the impact of this action has not yet been material to the group's overall financial performance, some progressive impact to the group's US operations would result from a protracted government shutdown," BAE said.

It added that earnings this year could be hit if it does not complete the long-running saga of pricing negotiations on a Saudi Arabian Typhoon aircraft contract, worth around £4.5bn, by the end of the year.

However, BAE said it believed there would be a "satisfactory completion" to the talks soon.

In the UK, talks are also ongoing with the Ministry of Defence over the future of naval shipyards, which are under threat due to a likely shortfall in work once the £5.3bn Queen Elizabeth aircraft carriers are built. This could lead to a partial shutdown of an historic site in Portsmouth.

BAE said that it is looking at "potential amendments" to the Queen Elizabeth contract.

The group has purchased £134m of stock since February, when BAE started a £3bn share buyback programme over three years.

The pension scheme will receive £340m as part of this project.