How Many Carillions?

Dominique Sayer discusses the collapse of Carillon and its political fallout, from a Labour Party perspective.

From Tories to a Trade Union General Secretary, the collapse of Carillion can be seen as nothing else but an absolute failure of decades of government policy. Whether one agrees with free market involvement or full state control of the public sector, there is no doubt that the debacle of Carillion has made the public at large look once more at how the government fund our public services.

The question is should we fund the public sector through government money only, running things in house and not for profit or should the government involve private finance and look to the market to drive the best deal and obtain the best results? After years of the status quo and a generally accepted ‘pro market’ viewpoint, is it now time to change tack?

On Thursday, there were 20,000 people waking up who would have been worried that their jobs are no longer there. Many of those who are concerned for their position are people doing important jobs but often behind the scenes and on low pay; NHS cleaners and school catering staff to name but two. These are people who are working, supposedly, in the public sector; they are there to help others and not to work for a company that is designed to make a profit.

The government has taken steps in the last couple of days to get to grips with the issue by fast-tracking the insolvency investigation with business secretary Greg Clarke saying “It is important we quickly get the full picture of the events which caused Carillion to enter liquidation, which is why I have asked the Insolvency Service to fast-track and broaden the scope of the Official Receiver’s investigation”. This is a good move and it is a sign that they have taken this situation very seriously. In fact the government were fortunate today to learn that 90% of Carillion’s private customers have agreed to continue to fund the firm in the interim until alternative suppliers can be found alongside their pledge to pay all of those working in the public sector.

Despite this attempt at damage limitation, it is hard to see how the optics of the events of the last few days can be changed from overwhelmingly negative about the government to at least neutral. When Oxfordshire County Council are forced to put the fire brigade on notice just in case the workers employed by Carillion did not turn up to serve school lunches, it is hard to imagine a more damning indictment of private enterprise involvement within the state, than when one of our accident and emergency services have to prepare to serve lunch to children rather than the job they were paid to do saving lives.

Carillion have debts of £1.3 billion and also a £600 million pension’s deficit. These are eye-wateringly high numbers and will become somewhat galling for those employed by the business when the chief executive, Richard Howson, was paid a total of £1.5 million in 2016. Not only this but as he left that year, he then also managed to negotiate with the company that he would retain a £600,000 per annum in salary and £28,000 in bonuses until October 2018. Can anyone imagine an employee on minimum wage being given such respective generous terms upon their leaving? Without sounding too flippant, it all of a sudden seems clear that even Richard Howson knew Carillion were not great with finances.

Private business is no bad thing. From the ability to choose the mobile phone contract that we want, where we buy our clothes, to the choice of which set of cutlery that we want to buy. Business is important, necessary and can be a force for good in the world. This is different. What we have here is one of those seminal moments where the public look at something and feel a need for change. The Overton window looks to be shifting on whether we involve private companies in the delivery of public sector services. Do we want profit to be the motive of an organisation that employs people to serve lunch to children at school? Do we want capital to be paramount when we think of someone cleaning an NHS hospital on minimum wage? When even the National Audit Office state that the taxpayer will have to fork out a total of £200 billion to private companies involved in the public sector in the next 25 years due to private finance deals, it should come as no surprise that they have found that these deals “result[s] in additional costs compared to publicly financed procurement”.

The state is certainly no panacea to all problems and cannot be seen as one but when Jeremy Corbyn says “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” it is going to be hard to argue against this for the government when the example of Carillion hangs high. The Labour Party is not only on the same side as the public on this debate, but they also have a real needle with which to poke the Conservative Party with and to win support for the public sector and their ambitions of nationalisation.

Dominique Sayer is Chairman of Parliament Street’s Labour Now! policy group.

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