Jeremy Corbyn branded the collapse of HS2 contractor Carillion a “watershed moment” for the UK as MPs savaged huge salaries handed to the top execs who presided over its failure.
The Labour leader said the fall of the mega-contractor was symptomatic of a failing “outsource-first dogma” as he linked the news to the ailing Virgin East Coast rail franchise deal and PFI deals with the NHS.
Corbyn’s warning came as ministers insisted that the taxpayer had been protected and claimed that the firm’s former bosses could face ‘severe penalties’ imposed by the Official Receiver and pensions regulator.
Outsourcing and construction giant Carillion - which employs 20,000 British people - went into liquidation after issuing a major profits warning last year.
It has public sector or public/private partnership contracts worth a staggering £1.7bn and ministers were so worried about the implications an emergency COBRA meeting was called on Monday so they could discuss the crisis.
The group’s massive portfolio included providing school dinners, cleaning and catering at NHS hospitals, building HS2 and maintaining 50,000 army base homes for the Ministry of Defence, but it had been struggling under £900m of debt and a £587m pension deficit.
Cabinet Office minister David Lidington said the Government refused a last-ditch plea for £20m bail-out for the firm so “shareholders and lenders bear the brunt”, rather than taxpayers.
And in the House of Commons, Labour MPs put the PM’s spokesman under intense pressure to act after it emerged top execs who presided over the firm’s failure trousered huge pay-offs.
In a special video released by Corbyn on Monday night, Corbyn echoed their concerns.
He 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.”
He also linked the NHS winter crisis to private sector outsourcing of health services, adding: “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.”
