Carillion

I notice that Carillion pensions are protected by the EUs pension protection scheme which we of course adopte

I am puzzled as to why a poster indicated that if you had been a teacher you lacked a level of understanding?

Rather an oxymoron I would have thought

Wilma and dj you almost sound as though you know what you are talking about - surely not here on GN? I hope neither of you were teachers?. Seriously, there have been several excellent well informed posts on here and listening to the radio this morning, it’s clear that this thread is covering all the many and varied issues that have been raised. It’s incredible isn’t it that last year the Board changed its bonus rules so that those who led it into failure will now be able to keep those ‘earned’ whilst they were driving the company into the ground.

Anyone seen Grayling lately?

He has a pile of questions to answer over the railways and Carillion.

The first basic problem is the tender process. There's nothing in the tender process that stops companies who have failed on other contracts tendering for different contracts. The only red flag is a particularly low price. Most of the companies that bid for government contracts are experts at the tender process and once they are successful in winning one, it's easy to win others.

The second basic problem is the service level agreements. The penalty system is far tighter now than it used to be, but there's nothing to prevent a company paying out monies in the form of wages, bonuses and dividends even on failing contracts. It takes so long to activate penalty clauses because nobody wants the contract to fail. Even if a contract has staged payments with penalty criteria, the company can still keep paying out. Not all companies are like Carillion which is basically a merger of some genuine big name companies. At the end of the day many are just hedge funds. Plenty of hedge funds can make enough money without completing the contract and to risk going bust. They are the modern day carpetbaggers.

As far as HS2 is concerned, The other companies involved in HS2 have already told the government that they can cover Carillion's contract. That was done as part of the contingency planning last week. In due course the government will argue that the HS2 contract was allowed to be awarded to Carillon in an effort to bolster the company whilst it tried to find a solution to its financial problems. This is almost standard practice because large companies have multiple contracts running and they are often dependent on one another. By awarding Carillion a contract for HS2 worth more than a billion pounds, it will have helped other contracts to continue. That's big business and the risks are high.

The government will also argue it was trying to avoid the need to take in house hundreds of contracts that were in danger of failing. That strategy failed and the contracts are being brought in house now. A lot of the jobs will be secure for the near future, but it will be the government paying the wages. At some point the future of each contract will be decided and that's the point jobs will be at serious risk.

Public sector contracts are a source of money for private companies. A public sector contract is the equivalent of a cheap loan. And yes, public sector contracts are a bottomless money pit.

One further point. The vast majority of workers on public sector contracts are not well paid. So those workers will not have high incomes when they retire. Many will require top ups from the State in the form of Pension Credit and Housing Benefit, etc. So any 'savings' from the government not employing these workers in the public sector are vastly reduced.

Smoke and mirrors.

www.theguardian.com/uk-news/2017/dec/18/put-safety-ahead-of-cost-cutting-urges-grenfell-tower-building-report

Concerns about privatisation.

www.independent.co.uk/news/business/news/carillion-liquidation-live-updates-latest-updates-hs2-nhs-contractor-high-speed-2-construction-a8159411.html#post-1116458909

I was just thinking, isn't that what trump used to do with his businesses, go into voluntary liquidation, then set up another one.
I hope our laws are stricter than that for Carillion bosses. I hope they have to give up other directorships as well.
I am sure they can manage to survive on all the millions they have stashed away in tax havens - a lot better than those small company bosses who are owed a few thousand by Carillion, and still have to pay their workers at the end of the month.

Jalima, that's what architects or civil engineers had to do until it was thought they weren't necessary.
Grenfell is proof of the cutting corners that goes on without a project manager on site.

Surely the whole point of getting a private firm in to do these jobs is so that the LA or government departments do not have to oversee.
I don't mean having anyone there day-to-day constantly checking, but to keep stricter controls instead of just handing out the contracts without making sure they are adhering to certain criteria throughout the term of the contract.

I have just re-read my post about the Doomsday Book and don't think it's clear - we don't have those figures held centrally.

They do, GracesGran. It's held under commercial confidentiality.
Have you ever tried to find out about anything held by the NHS under FOI requests? Commercial confidentiality covers all private health care.

Surely the whole point of getting a private firm in to do these jobs is so that the LA or government departments do not have to oversee. Otherwise what is the point of giving the job to a private company? You are paying for the same work twice, aren't you?

That's just ideology again.
Think about all those jobs that have been outsourced now; bin emptying, running prisons, school catering, probation services, hospital cleaning, all the jobs that Serco and Balfour Beatty do.

They all have people complaining about them. They undercut staff numbers as well as wages, use cheap materials, etc.

Can you actually give me one example of a private company taking over public services where people praise the company?

Stella Creasy has just been talking about a "Doomsday Book" on Newsnight. Apparently 'several people have talked about this. "It's where we actually know what it is we owe and to whom, because the Treasury doesn't even hold that information centrally. So we don't even know how much we are in hock with".

Apparently the government wants to tell us that PFI has delivered £60bn worth of investment but this is at a £200bn cost.

I am actually stunned that we don't have this information held within the Treasury.

www.independent.co.uk/news/uk/politics/carillion-collapse-bonuses-investigation-inquiry-liquidation-government-outsourcing-a8160946.html

There's a month by month link on here showing that Carillion should never have bid for HS2.

I notice they are now trying to blame overspend.
All jobs have what they call a contingency amount built into them.
By the way, lemon, I know a bit about that as my husband was an architect and I used to check his figures sometimes. Not that I claim to be an expert or anything.

Carillion is a building company, yet it runs hospital wards, car parks, cleaning companies. Why is that acceptable.
I think it can work as long as they employ experts who know how these enterprises should be run properly and efficiently, that the cost to the government, LA (ie the taxpayer) etc is reasonable, those at the top are not greedy and cream off too much and the profits are reasonable but not so huge that shareholders profit at the expense of the workforce who should be paid a decent wage and expect to receive a pension at the end of their working life.
Private firms can often be run much more efficiently than government departments.

If governments dish out these contracts and leave firms to get on with them without keeping a tighter control or being aware of the pitfalls then this is when a disaster like this will happen.

thegreatcritique.wordpress.com/2018/01/16/this-would-never-have-happened-to-a-nationalised-industry/

dj

I looked that word up, maryeliza. I thought you were showing off.

mabubareas =many areas ( but clearly not previewing)

Aw * lemon* when have I said I’m an expert on anything - you on the other hand post posts which demonstrate sheer mastery in totally misrepresenting and/ or exaggerating the position of posters you don’t agree with. However,it is true that I am very knowledgable about a great mabubareas of life. As for your statement that there are not many who understand what has happened or will happen ,I think that applies even more so to those in government who have allowed this sorry saga to happen. And the last CE of Carillion and past and current Chair really have demonstrated that they don’t know how to run a huge business.

Oh, and we can all recognise greed when we see it.

What about the Carillion pensioners-to-be, lemon? Or don't you care about them?

Carillion didn't understand what was happening with Carillion, lemon - I hope!
If they did understand it was fraud.
That development I was talking about in Durham was only awarded in November 2016. They knew then what was happening. They shouldn't have bid for the contract.

A ‘blessing’ is always good btw

You never disappoint Maryeliza .... in fact, is there any area of life or subject that you are not more or less an expert on? !
I seriously doubt that there are many on GN who really understand exactly what has happened with Carillion and who know exactly what the best thing is to happen next etc.

What most on here can do is copy what they google or hear on the radio, or see on a blog or on tv , and fair enough, but when they act as if they know how to run a huge business, especially when they have actually been teachers ( or similar) that’s when it becomes daft.

One thing the woman MP said this evening is that the government perhaps should have had more of a strategy to giving contracts to SMEs rather than just to the big boys - something I rather though gilly might have agreed with.

And I’d love for your thoughts on current and future Carillion pensioners looking at losses of 10-20% whilst the Chief Exec who ran away after the profits warning is being paid his salary of £700,000 until next October.