The Carillion Crisis Shows It’s Time To Take Back Control From Contractors

Tens of thousands of jobs and vital services that hundreds of thousands of people depend on are on the line.

15/01/2018 15:55 GMT | Updated 15/01/2018 15:57 GMT
Yui Mok - PA Images via Getty Images

The unfolding Carillion crisis has brought the failures of our broken economy into stark relief.

Today we have seen the collapse of a company that runs swathes of Britain’s public services. Carillion holds £16 billion worth of public sector contracts, including contracts in hospitals, schools and prisons. Tens of thousands of jobs and vital services that hundreds of thousands of people depend on are on the line.

Despite multiple profit warnings, Ministers have continued to spoon-feed this company taxpayers’ money. Last year, as part of a consortium, Carillion got its hands on two HS2 deals, worth £1.34 billion which were approved by Chris Grayling - the same Minister who is allowing Stagecoach and Virgin to walk away from their billion pound-plus commitments on the East Coast Main Line, leaving the taxpayer to foot the bill.

Carillion was also awarded two contracts with Network Rail for maintenance and upgrade works worth more than £320 million. And astoundingly it bagged two service deals with the government’s Defence Infrastructure Organisation worth £158 million. 

I’ve not heard many Ministers taking to the airwaves today to proudly proclaim the efficiency of the private sector over the public sector. I suspect I won’t.

Unions like ours have long warned that the so called ‘efficiency’ of private contractors is not so efficient after all. 

The sort of efficiency this government means is workers doing more for less. That means lower pay, worse terms and conditions and often a lower level of service in order to deliver a contract at the lowest possible cost or making promises that cannot be kept. Because at the very crux of it, if a company’s reason for existence is to make money, something has to give. And it’s never the profit margin.

Contracts become even more ‘efficient’ when the companies, many of which are too big to fail or are providing services we simply cannot allow to grind to a halt, start to run out of money. The company trousers the profit, the public bears the risk.

Sadly, it seems to take a crisis for politicians to take notice. This is just latest instalment.  And it won’t be the last if action isn’t taken.

Take the case of Coperforma in the South East, where at least £14 million of public money was handed over to the private company to deliver patient transport services. Within just seven months it failed to fulfil its contract and had to be brought back into the NHS. Ambulance drivers were left unpaid while taxis reportedly had to be drafted in to take patients to appointments.

Every day unions see practices that would either be not allowed or unsustainable in the public sector. ISS workers in London, for example being consigned to low pay and precarious terms and conditions – less and worse than those employed in the public sector. That is the price for a contract the government may call ‘efficient’ but really is just bargain basement.

This issue is bigger than one company. It is about what we want for our public services and those who work in them. It is about how the economy works and what the priorities of government are. It goes right to the heart of whether we as a country put people or profit first.

That is why GMB is calling for immediate action to protect the jobs of Carillion workers and the services people rely on – not just today, but in the long term. That must be the priority. We want to see the public sector contracts taken in house and the livelihoods of workers secured. But as soon as that has happened, there must be a full and independent public inquiry into the use of private contractors by government departments to provide public services. 

That review must cover the overall cost of outsourcing on wages, productivity, job security and Government intervention – not just the sticker price of awarding a contract at the lowest possible cost.

It must look at how PFI contracts can be rescued from the grip of private hands. As of 2017, total UK PFI debt liabilities, largely owed to banks, amount to around £320 billion, as much as £222 billion of which remains outstanding. In many instances, we’re paying back debts with eye watering levels of interest. 

And it must examine the political relationship between companies that are awarded outsourcing contracts and the politicians who award them. It’s worth noting that the boss of Carillion was until recently the chief executive of the Wates Group. Wates has given £430,000 to the Tories over the last decade, including a £50,000 donation in February 2017, just months before the last election.  Carillion’s chairman, Philip Green advised the Conservative Government on corporate responsibility and was even awarded a CBE in 2014 for “services to business” – just two years after Carillion admitted blacklisting workers.

In 2015, Green was among 100 big business chiefs who signed a letter to the Daily Telegraph saying a change in course away from the Tories’ policies would “threaten jobs and deter investment.” The irony is scarcely believable.

The reality is that our future has quite literally been mortgaged away to companies who want to make a quick quid on the back of the taxpayer and our public services. They have been handed away on a plate.

To their credit, Labour under Jeremy Corbyn has learned lessons from the past and is preparing to bring these public contracts back in house.

Meanwhile, plenty of Tory MPs have happily taken to take to the airwaves in recent years calling for the UK to ‘take back control’.

Well now it’s time to ‘take back control’ - from the unaccountable companies who are currently laughing all the way to the bank.