Schools

Failed construction company leaves DfE £2m out of pocket

Documents filed by administrators show the DfE was owed £2m when Caledonian Modular collapsed

Documents filed by administrators show the DfE was owed £2m when Caledonian Modular collapsed

18 Sep 2023, 5:00

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The Department for Education (DfE) will be at least £2 million out of pocket after a company that later failed built schools that were forced to close because of safety issues.

Caledonian Modular fell into administration in April 2022. It emerged last month that three schools it built had to close because they could not withstand “very high winds or significant snowfall”.

Some were forced to delay the start of term until temporary classrooms were found.

Another two part-built schools had to be demolished this spring after “defects” were found.

Documents filed by administrators on Companies House show the DfE was owed £2 million when Caledonian Modular collapsed.

But there were “insufficient funds” to cover unsecured creditors, which included the DfE. 

Administrator Mike Denny, from Alvarez & Marsal, also warned that the figures only reflected what had been in Caledonian’s books and records “at the time of insolvency”.

“Directors wouldn’t have been aware of any additional costs to the DfE at that time,” he said.

The £2 million may not “have reflected any sort of counter-claims or losses that the other party may have”.

In a parliamentary response this week, Nick Gibb, the schools minister, said “appropriate steps” were being taken to enforce the DfE’s contractual rights in relation to “affected” Caledonian Modular schools.

This included the schools that had to close because of “possible safety defects and those that never reached completion”. 

“The department is pursuing all avenues for redress against the parties responsible for those issues.”

The DfE would not comment further on what costs it was trying to recover. 

Schools Week reported last week that the department also still had to find construction companies for two special schools originally contracted to Caledonian – Greenwell Academy in Essex and River Tees Academy Grangetown in Middlesbrough.

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