Health trust bosses in Northumberland have assured they have “robust plans in place” to make sure work on a £35m community hospital continues after its main contractor filed an administration notice.
Former North East Company of the Year Merit filed a notice of intention to appoint administrators last month, weeks after it was served a winding up notice by HMRC. The Cramlington company has since been granted an extension of that notice while it mulls its options with business advisors.
The business has previously told BusinessLive that it remains confident a solution can be found, explaining that the notice had been filed as a result of “certain customer projects experiencing delays, which in turn has placed significant additional pressure on the group’s cashflow.”
Merit, a specialist in delivering technically complex buildings, has been involved in the construction of Berwick’s new £35m community hospital, having won the contract for its creation from Northumbria Healthcare NHS Foundation Trust in 2021. It is also creating the Medicines Manufacturing Centre (MMC) at Seaton Delaval.
A spokesperson for Northumbria Healthcare NHS Foundation Trust confirmed it is in talks with the company.
It said: “This is a very unfortunate situation and we appreciate that this will be a very difficult time for all involved. The Trust is continuing to work in partnership with the organisation and its advisers, and has adhered to the contractual agreements in place.
“We have robust plans in place to ensure construction work continues to progress both the Berwick Community Hospital and Medicines Manufacturing Centre at Seaton Delaval. We remain focused on delivering both projects as planned and are in ongoing dialogue with all relevant parties to ensure continuity and minimise any potential disruption.”
In the meantime, while Merit is understood to have maintained a presence at the site in the Northumberland town, dozens of subcontractors have been pulled from the construction site amid a pay row. Around 50 specialists, subcontracted through recruitment firm AE Partners, were advised not to return to the site in emails marked ‘urgent’, which claimed the agency is owed money by Merit.
In emails seen by BusinessLive, AE Partners told workers: “Unfortunately, due to the outstanding balance and the fact that the payment we were promised has not yet been received, we were unable to accept any timesheets from Merit this week. Please know that we are working tirelessly with Merit to find a resolution and ensure everyone is paid as soon as possible. Merit has also assured us that they are actively working with Berwick Hospital and the NHS Trust to secure the necessary funds to pay their vendors, including us.
“We truly understand that this is not an ideal situation - everyone has families, bills, and commitments - and we are doing everything in our power to resolve this quickly and fairly for all involved.”
One worker, who didn’t want to be named, said: “I’ve been working up there for a few months through AE Partners and I got an email from them one Sunday saying don’t go back to work Monday, Merit haven’t have paid us. We were hoping it was temporary. I found somewhere new to work, but then come pay day I haven’t been paid. I’m owed hundreds of pounds and have a family to feed so we’re not happy about this situation.”
A spokesman for AE Partners said all paperwork has to be sent to Merit to be signed off before it is sent to them to process for payments. The company says all payment requests received have been covered, but they also recognise that some shifts may not have been processed just before the contractors were stood down.
The firm said: “We do not supply Merit workers, only independent subcontractors. We informed Merit five to six weeks ago that we could no longer supply them, and were going to have to stand down contractors. For an additional couple of weeks Merit made pro forma payments to allow us to pay the contractors and keep them on site.
“Two weeks ago when the pro forma didn’t get received, despite promised, we still paid the contractors out of our own funds. We told Merit we would no longer accept any hours, nor raise any invoices to them, and they had to engage the contractors direct should they wish to continue. We have not received any more hours, raised any invoices or paid any contractors since.
“We also advised contractors it was in their best interest to stand down, as Merit hadn’t paid us. We had paid the contractors for all hours processed up till that point.”
Merit declined to comment.
