Jeremy Corbyn called for private firms to be “shown the door” by the Government as he accused Theresa May of “negligence” over the collapse of the construction giant Carillion.
The Labour leader said the PM must end the “costly racket” of private companies running public services, as he picked out failures by Virgin, Stagecoach, Capita and Atos to deliver on promises to the state.
During a testy exchange at PMQs dominated by the fate of Carillion, Corbyn said the “ruins” lay around May as he pressed her on contracts handed to the firm despite a major profits warning last year.
May hit back hard, however, saying his Shadow Foreign Secretary Emily Thornberry had previously praised Carillion and a third of government contracts with Carillion were in fact let by the previous Labour government.
Summing up, Corbyn said: “This isn’t one isolated case of Government negligence and corporate failure - it’s a broken system.
“Under this Government, Virgin and Stagecoach can spectacularly mismanage the East Coast Main Line and be let off a £2 billion payment.
“Capita and Atos can continue to wreck the lives through damaging disability assessments of many people with disabilities and win more Government-funded contracts.
“G4S promised to provide security at the Olympics - failed to do so and the Army had to step in and save the day.
“These corporations need to be shown the door - we need our public services provided by public employees with a public service ethos and a strong public oversight.
“As the ruins of Carillion lie around her, will the Prime Minister act to end this costly racket of the relationship between Government and some of these companies?”
May accused Corbyn of targeting the private sector and failing to recognise most UK employees worked in the private sector.
She said: “We’re [the government] a customer of Carillion, not the manager of Carillion.”
May added: “We’re making sure in this case that public services continue to be provided, that workers in those public services are supported and taxpayers are protected.
“But what Labour oppose isn’t just a role for private companies in public services - it’s the private sector as a whole.”
She went on to claim Labour had “turned its back on investment, on growth and on jobs”.
And at one point May even refused to provide Labour with a response, telling the Commons: “I’m very happy to answer questions when he [Corbyn] asks one. He didn’t.”
One Labour MP could be heard labelling May an “absolute disgrace”.
Corbyn said: “I asked the Government if they’d been negligent or not - and they clearly have been very negligent.”
PMQs was unfolding as it emerged the majority of private sector contracts held by failed construction company Carillion will continue to be paid.
The Insolvency Service said that 90% of the company’s private customers have indicated they will provide funding to keep employees on until a solution is found.
The company’s interim chief executive has revealed that Carillion had just £29 million in cash by the time it went bust, at a time when it was struggling under £900 million of debt and a £587 million pension deficit.
Outsourcing and construction giant Carillion - which employs 20,000 British people - issued its third 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.