City Link workers made redundant after consortium's bid is rejected

More than 2,300 City Link workers who discovered their employer was going bust on Christmas Day were made redundant on New Year’s Eve.

The administrators of the delivery company owned by multimillionaire Tory donor Jon Moulton made 2,356 employees redundant at 4.30pm on Wednesday.

Moulton, whose Better Capital private equity firm bought City Link for £1 in 2013, said he had done everything he could to keep the company going and was very sorry that the collapse ruined Christmas and New Year for so many people.

“Of course, I wish it would come on different days,” he said. “We did everything we could to make sure the announcement would be on Boxing Day, not Christmas Day. It [would have] still been horrible, but a little less horrible.”

Moulton, who donated £450,000 to the Conservatives between 2004 and 2011, said Better Capital had probably lost about £20m trying to keep City Link going.

Accountants at EY told staff that just 371 of them were to be kept on, but only until a backlog of undelivered Christmas orders had been cleared and the company was wound up.

“It is with regret that we have to announce substantial redundancies at City Link Ltd, which ceased accepting new parcels on 24 December 2014,” said joint administrator Hunter Kelly. “The company endured substantial losses, which ultimately became too great for it to continue as a going concern, and City Link Ltd entered administration following an unsuccessful sale process.

“At meetings across City Link’s UK sites on Monday December 29 and Tuesday December 30, employees were informed that there would be substantial redundancies as no new business was being taken on. Many of these employees were sent home and informed that they would shortly receive formal correspondence to confirm their work status.”

The redundancies came despite a last-minute bid to save the company. The administrators said the unnamed consortium’s bid “offered no money up front and significantly undervalued the assets to be acquired”.

Moulton said the consortium was headed by an “unknown businessman from Stoke-on-Trent”. He said he had tried to sell City Link to Amazon, its biggest customer, in the months before the delivery company’s collapse.

The redundancies will affect the head office in Coventry as well as hubs and depots around the country. There will be 468 job losses in “central functions”, which includes head office staff, and a further 279 staff will lose their jobs in the Coventry hub.

Mick Cash, the general secretary of the RMT union, said: “The confirmation from the administrators that they have just sacked 2,400 staff and are pulling the plug on any efforts to save City Link is a disgraceful and cynical betrayal that will wreck the lives of our members, many of whom are owed thousands of pounds.

“RMT does not believe that those pulling the strings had any interest in saving this business and were happy to cut and run, leaving a trail of human misery in their wake. The City Link collapse has blown the lid off the cosy relationship between bandit capitalism and the political elite.

“RMT will continue to advise and represent our members caught in this corporate failure. Those responsible will slink away with their own resources ringfenced and leaving the taxpayer to pick up the redundancy tab. The City Link Christmas destruction is an act of industrial vandalism that shames our nation while the Government looked on and offered nothing but hollow words.”

Moulton said he hoped “at least a good proportion” of the redundant City Link staff would get new jobs soon. “The administrators said at least 60 employers were chasing them.”

On Tuesday, the courier company APC Overnight said it would give priority to City Link staff in filling up to 100 vacancies at its national sorting centre in Cannock, Staffordshire.

On top of the 2,356 City Link redundancies, 1,000 self-employed drivers face serious financial difficulties with some small businesses owed up to £21,000 in back pay.

Phil Valentine, a freelance who runs five vehicles for City Link in the Lake District, said he was owed about £21,000 for two and a half weeks’ work. During that time, he had incurred expenses including drivers’ wages and insurance for the vans plus a £3,000 fuel bill. He has been told he is unlikely to receive any of the money he is owed and will now have to seek new work and pay out as much as £1,200 per van to have them resprayed in the livery of any new employer.

“It’s going to be a struggle. Even if I find new work, I may have to wait six weeks until I get paid,” he said. “What baffles me is that they knew we were all self-employed but they let us run up debts and deliver parcels when they must have known we wouldn’t get paid.”

Fellow Lake District courier Mike Parkinson, who has worked for City Link for 15 years, said he was owed about £7,500 for two weeks’ work and was stuck with ongoing costs of more than £3,000 a week to lease and insure the two vans he runs. “I’m panicking and have been sending emails to every single courier company but they are going to be inundated with drivers,” he said.