Carillion

It was nothing but a Ponzi scheme (getting in savers by promises of big returns, paid for by savings from new savers) or in this case, * getting contracts by under bidding, hoping to make up the profits by getting in more contracts by underbidding. Failing that borrow more money to expand the business. - and repeat from to * as often as necessary.

Carillion have been in trouble for some time, the debt mountain has been growing and they twice published profit warnings last year.

What I cannot understand is why the government were prepared to place so many government contracts with them. It is basic business sense not to be too reliant on one supplier. Whether their's was the lowest bid or not, that should not be the only factor in deciding who you award a contract to. Also, what were the auditors doing? Surely they should have posted a warning with the accounts.

Carillion is RBS all over again; Corporate hubris, and a belief that it would all sort itself out in the end. - and it has - but not in the way they planned

How would the government do this?
Many of these contracts Carillion got were dealt with ‘in house’ by Govt depts and Councils etc.

Yes, at one time, but Government Departments no longer have the expertise - and a lot of people who worked for the Government are, of course, the same people who now work in the private sector.

The other thing is that other firms must have spent a lot of time and money to put in tenders and bid for some of this work, only to seem the contracts go to the same firm again and again - one which they knew could possibly go under.
The bids they put in could have been based on sensible pricing too, but they lost out because Carillion was cheaper.

see the contracts

Several years ago I worked for a very major player in the petrochemical industry. At the start of a new multi million project, interested parties would be invited to bid for the myriad different contracts. The bid evaluations were undertaken with great security and each potential subcontractor was evaluated on grounds of financial strength, other contractual commitments, capital balances, percentage of turnover etc. On this basis, many were rejected, even if they were notionally the cheapest. This was before the crash, before all the RBS, Northern Rock scandals. Why was Carillion exempt from this process? Or are the people evaluating these bids simply looking at the bottom line?

I think your summary is a good one Jalima. It does just leave me with that sickening feeling though, that all the deconstruction of groups of talent we once had has left us very open to much more going wrong - so what next?

I'm not sure - Local Government used to go for the lowest bidder (foolish imo) but that was many years ago. Is there anything in the rules and regulations that says that must be the case?

I don't think so. I would agree with foolish. Its just too simplistic. I think it comes back to the fact that if you want good services you are going to have to be prepared to pay for them.

Talking about banks, Philip Green is supposed to be chairman of Williams and Glyn Bank if it gets divested from RBS.

The hedge funds have had a very good day

It couldn’t have come at a worse time for the NHS

Caroline Lucas today.

"Carillion's payouts to shareholders have increased in each of the 16 years since formation of company, boosted by Govt obsession with PFI. Yet today the company collapses, risking 1000s of jobs & threatening people's pensions. That's the neoliberal story, right there."

David Lidington has said that Jobcentreplus has a rapid results service.
Really?

It was nothing but a Ponzi scheme...

Funnily enough, MOnica, that thought had crossed my mind this morning..

Amelia Gentleman in the Guardian over a year ago.

"As soon as you enter Wandsworth prison, you notice that dozens of windows on this side of the four-storey A-wing have been smashed. This level of vandalism inside a prison is a bit startling, but it’s such a common problem that prison officers pay little attention to the scale of the damage until asked about it. Each cell window has three narrow transparent panels and most cells have at least one broken pane; prisoners have stuffed duvets and towels into the cavities, or patched them up with flattened milk cartons to keep out the January cold. The prison’s head of security believes that some prisoners are smashing holes in their windows in order to receive deliveries of drugs flown in by drones.

The drone that crashed in December was quite large and carried a camera to help its owner guide it to its destination. The flight was made at a time when the prison is most vulnerable, during the night hours when there are only seven prison officers on duty, responsible for the 1,600 prisoners locked in their cells. Since last February, the deliveries have become a fairly routine occurrence. Several other crashed drones have been discovered on the roof of the prison, similarly loaded with mobile phones and drugs."

She was told that fixing the windows was the job of Carillion.

"Lidington says that the private sector plays an important role delivering UK public services - something that parties on both sides of the House of Commons have accepted."

I don't think Labour accept it.

Of course as well as the 20000 employees there are all the other firms Carillion will take with them.

It's 20,000 UK employees but I've seen that they employ 43,000 people over all in the UK and overseas.

I wonder how many firms are subcontracted to them?

I don’t know an exact figure but it will be quite a few I would imagine whitewave much the same as if Nissan went down they would take hundreds of North East SME’s with them . Very sad all round .

twitter.com/MartinShovel/status/951940453057941505/photo/1

Corbyn just sees the public sector as a bloomin’ bottomless pit of money ( called tax payers).

There don't seem to be many Tory MPs listening to Lidington in the Commons.

What's this got to do with Corbyn?

Most people in work, whether private or public, are tax payers, unless they are the bosses who pay themselves through tax havens.

I think it comes back to the fact that if you want good services you are going to have to be prepared to pay for them.
"You get what you pay for" as DM used to say.

I watched a programme on Crossrail not that long ago and remember being very impressed.


From Crossrail to school dinners - they have been providing a very wide range of services across the country.

Seems to me it was Carillion that saw the public sector as a bottomless pit of money.