THE BLOG
17/01/2018 10:47 GMT | Updated 17/01/2018 10:47 GMT

Carillion Collapse: A Liquidation Likely To Change The Course Of British Politics?

Phil Noble / Reuters

Millionaire moguls. Fat cat bosses. Coining-it CEOs. Those were just some of the lines of attack the from the  Trades Unions and Labour MPs as it became clear that one of the UK’s largest construction firms, Carillion PLC, had been placed into liquidation  - putting nearly 20,000 jobs at risk.

As Government Ministers across every Whitehall department scrambled to attend the emergency COBRA meeting in Westminster, the relentless 24-hour news cycle went into overdrive with one question: who to point the finger at for Carillion’s shock collapse? The firm is responsible for the delivery of Britain’s key public services; it builds hospitals, upgrades rail infrastructure, manages facilities in prisons, supplies food to schools and looks after Army barracks.

Although it has been confirmed that there will be no Government bailout, Conservative MPs have been quick to react to the crisis and have begun attempts to frame the debate around the reasons for the company’s downfall. 

Some commentators have suggested that a number of Private Finance Initiatives had been involved in a large proportion of Carillion’s infrastructure projects. The sky-high interest rates usually associated with PFI clearly contributed to the rocketing of the firm’s £900million debt, but there is no doubt top Tory aides will have been instructing Ministers to brief heavily to the media that it was actually Tony Blair’s New Labour that rolled out the majority of PFI deals to keep our public services ticking over. 

But what should Labour’s response to the Carillion crisis be?

Well, supply chain jobs that were reliant on existing Carillion contracts have now been placed in jeopardy. There is also evidence that small businesses have had to lay off staff, so it is safe to say that news of its liquidation has had reverberations across every sector of the economy. With the fact that there will be no state bailout, which is likely to soften the fiscal blow to taxpayers, some would say there is little Labour can say or do to lay the blame firmly at the door of the Tories. The fallout from the crisis is likely to rumble on with new angles sparking additional coverage across the broadcast, online and print press. Take the war of words between the Business Secretary Greg Clark MP and his opposite number in the House of Commons, Rebecca Long-Bailey MP, as just one example of politicians pouring fuel on the Carillion fire.

We have already witnessed the Government announce a ‘fast-track investigation’ to delve deeper into the dire financial situation at the company. But it is incumbent on Her Majesty’s Official Opposition to ask a series of probing questions. How can it be right that Ministers continually granted big-money contracts to a major construction firm when it publicly issued a number of profit warnings? There will be undoubtedly be many lessons learned from this crisis, particularly from a political perspective, and the blowback arguably kickstarts a wider conversation about the relationship between large companies, its directors, major shareholders and Ministers in Whitehall.

But if Labour is to gain any political capital from Carillion’s collapse, I would say look back a little to 2016. The near-closure of the Tata Steel plant in Port Talbot, which put 11,000 jobs at risk, forced the Government to place fresh emphasis on the delivery of its industrial strategy. Labour campaigned heavily on the issue - with Shadow Ministers joining protestors at the site on a number of occasions. Labour MPs, supported by a number of trades unions - namely Unite - deployed a savvy media operation which helped move the political dial and created the impression that the party was not only on the right side of public opinion, but it was also serious about jobs, the economy and the impact of foreign direct investment. 

Perhaps if Labour’s media team took a trip down memory lane to what was once an emergency at Tata Steel, it could find inspiration to help shape how it responds to the current situation at Carillion.