Carillion will make up to 400 people redundant as it cuts costs and streamlines its construction arm.
The redundancies, which were revealed as the group announced its interim results on Wednesday, will cost £10m, and came with news that Carillion's pre-tax profit for the six months to 30 June has fallen 25% from £12.6m in the same period last year (before all exceptional items) to £9m.

Chief executive John McDonough said the job losses would make the group more responsive and efficient by reducing duplication and cutting costs. But he added that because Carillion was investing in IT systems, the full benefits of the job cuts would not be seen until 2003.

It is understood that Carillion's regional offices will be cut from 35 to 15, with most of the jobs losses in administrative posts.

An analyst said the changes would see services and PFI overtake construction in terms of turnover.

McDonough is bringing together a number of Carillion's back-office operations, including finance, IT and human resources, into group-wide shared services centres.

Carillion blamed the fall in pre-tax profit on increased investment in PFI projects. It posted a £2.6m operating loss on its PFI investments.

  • Meanwhile, support services group Interserve, previously Tilbury Douglas, has seen its pre-tax profit jump 31% to £22.6m for the six months to 30 June. Turnover increased 41% from £451m to £636m. And Kier has bought regional housebuilder Allison Homes for £16.6m. Kier will assume the East Midland firm's debts, which total £12.7m.