The collapse of Carillion is a “watershed moment” that should bring an end to “rip-off privatisation” of public services, Jeremy Corbyn has said.
In a video released on social media, the Labour leader criticised an “outsource-first dogma” and insisted “it’s time we took back control”.
Mr Corbyn also linked the firm’s collapse with the premature ending of a Government contract with Stagecoach and Virgin, who had agreed to pay £3.3 billion to run the East Coast rail franchise until 2023, amid concerns that the two companies were considering pulling out due to financial losses on the deal.
He described the rail deal as a “bailout” and suggested it was evidence of a small group of companies going “from service to service, creaming off profits”.
Carillion has public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 army base homes for the Ministry of Defence.
But it has seen its shares price plunge more than 70% in the past six months after issuing a string of profit warnings and breaching its financial covenants.
A last ditch plea from Carillion to the Government to provide it with a £20 million lifeline fell on deaf ears over the weekend, triggering a compulsory liquidation to be overseen by PwC.
The Government has been heavily criticised for its role in the collapse of Carillion (PA/Yui Mok).
Mr Corbyn said: “In the wake of the collapse of the contractor Carillion, it is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced the public of billions of pounds.
“This is a watershed moment. Across the public sector, the outsource-first dogma has wreaked havoc. Often it is the same companies that have gone from service to service, creaming off profits and failing to deliver the quality of service our people deserve.
“The evidence is clear and it is everywhere. Look at the £2 billion public bailout of Richard Branson’s Virgin and Stagecoach for their own failure to run East Coast rail properly – or the scandal of the NHS being sued by private companies like Virgin after losing a contract bid.
“Staff and patients in our NHS are facing shocking conditions this winter. Tory underfunding has caused the crisis, but privatisation, outsourced contracts and profiteering has made it worse.
“Our public services – health, rail, prisons, even our Armed Forces’ housing – are struggling after years of austerity and private contractors siphoning off profits from the public purse.
“It’s time we took back control. We not only need to guarantee the public sector takes over the work Carillion was contracted to do – but go much further and end contracts where costs spiral, profits soar and services are hollowed out.
“Labour will end the PFI rip off, put an end the private-profit-is-best dogma and run our public services for the benefit of the many, not the profits of the few.”