Carillion

Gillybob, what would happen if Nissan decided to move its factory from Sunderland to Sweden or the Netherland

It would probably mean the end of hundreds of small businesses who are first, second or third tier suppliers. durhamjen

Wouldn't effect our business as we learned that lesson a long time ago.

Exactly the same as a big company going into liquidation.
Would you expect the government to help those small businesses?
Would you feel sorry for them?
Would you say serves them right?

You are talking about first/second/third tier suppliers.
November 10th last year, the government put out a list of contractors for its school buildings framework.
Carillion were first tier.
They were allowed to bid for school contracts over £12 million, yet the government knew about their finances by then. Why was this allowed?

www.gov.uk/government/publications/school-building-framework-winning-contractors-announced/school-building-framework-winning-contractors-announced

No matter how you analyse what did or did not bring Carillion down, at the end of the day the reasons are quite simple; bad and greedy management who tried to hide the problems by creative accounting and increasing dividends.

Isn't that what some of us have been saying, but told we are not experts and don't know what we are talking about.

You do not need to be an expert. The information about Carillion has been around for a long time. I get fed up the way governments and the financial markets are always taken by surprise by these events.

It is like the 2008 crash. If any of them had read the financial sections of the newspapers or even the FT, they would have found lots of articles expressing concern about all the febrile lending that was going on, the rise of self-certified mortgages and the mortgage lending in the States and the financial 'products' that were the result. Similarly the crazed lending in this country based on self-certification applications and the huge multiples of wages being lent.

Seems to me those that are meant to monitor all these things are functionally illiterate. In fact, many decades ago, I had a cutting from the FT pinned on the wall above my desk which stated that surveys had shown that 55% of managers were functionally illiterate, meaning they never read any work-related information they were given .

Jon Snow tweeted

Disgraced Carillion chief Richard Howson now director of firm in charge of inspections of Hinckley point C nuclear power station.

I think the financial markets probably helped in Carillions demise
M0nica with hedgefunds betting on their downfall.

I'm not sure what you mean DJ?

Of course I feel sorry for any business that goes into liquidation, no matter what the size, (silly question ) unless of course it was of their own doing. Which in the case of Carillion it would appear that it was badly run. I still feel very sorry for the workforce and their suppliers.

I think the government could do more to help small businesses (and big ones too) that are forced into liquidation through no fault of their own. (usually caused when another company goes bust on them) especially if they were still viable. Even just relaxing the PAYE/NI etc. rules for a period of time to help them recover. But that's pie in the sky, it'll never happen.

We need to keep people in work in order to keep our public services going.

Lots of people who are going to lose their livelihoods are those who worked for Carillion's branch of public services.
In which case, you feel sorry for people who work in the public services.

You appear to want to separate private and public, but Carillion was a private company bidding to take over public services.
That's completely wrong. Public services should be run for and by the public.

weownit.org.uk/node/1680

Government doesn’t usually interfere with what private business does, and as gillybob says, there are already legal things like charging interest on late payments.
If businesses just ‘stuck to’ one thing then they wouldn't grow.Do Tesco just stick to groceries?
Yes, they can over extend, but often are able to pull things back ( not in this case though.)

Both Labour and Conservative Governments have long used private companies to do public works, there is nothing ‘wrong’ in that at all.

There are ways of government keeping an eye on companies with which they have a contract. But due diligence was not carried out, and open accounting was not insisted on in many of the contracts somewhat alarmingly.

It isn’t a question if interference but guarding public finance and interests.

I think it is fine where companies are employed in major infrastructure projects, but they have no business in providing public services imo

But that is simply Socialist ideaology.
It has served various governments well to use private companies and us too as tax payers.

I put this on the Conservative Incompetence thread but it is probably as much related to this one.

I did think Chi Onwurah made some very good points on DP.

Her first point I picked up on that I agree with was that she felt that so many of our public services, our schools, our prisons, or hospitals should not be being delivered by the private sector because the profit motive does not lead to the best outcomes. She felt that public 'services' should be delivered, in the main, by the public sector.

She also described Carillion as a 'shell' company and said that the supply chain for delivering construction services to the public sector needs to be examined and investigated. She added that suppliers and contractors to the public sector, which includes public sector building of hospitals, roads, etc., should have sustainable business models and the supply chains should not be so long and broad leading to no actual control. The Labour Party argument is that there should be capacity within the public sector to manage these.

Her conclusion was that when it comes to the delivery of public services and to the management of public assets there needs to be the capacity within the public sector to do that directly.

I agree with that and would vote Labour if that is their policy.

M0nica it is both those things. And what angers me is that as I said before, I doubt any law was broken.

The only way to stop the abuse of the these contracts by the big companies is to stop giving them out.

I don't object to a school putting it's school dinners service out to tender. I object to the use of public sector monies filling the pockets of the shareholders and senior management of the large companies not delivering the goods. Scale is everything here.

lemongrove I don't deny that and am well aware it was Tony Blair's government that introduced PFI. But nobody intended or anticipated that privatisation contracts would become targets.

The line was crossed when the local service was no longer allowed to even bid for new contracts. Unfortunately the public sector staff were probably transferred with the work. This makes improving the situation so much harder.

The only solution that makes sense is for the work to be taken back in house by the government when a contract is due to be renewed. The staff should be transferred with the work.

This is what happens when a contract fails and the company cannot continue on a temporary basis or another company can cover the contract on a temporary basis. The government has to stop bailing out failing contractors. It's costing millions if not billions of pounds.

www.taxresearch.org.uk/Blog/2018/01/17/zombie-economics-will-ignore-the-destruction-of-human-capital-by-carillion/

The groups that work in the public services, school cleaning and catering, etc., should become worker co-operatives.

It was a bit foolish May telling Corbyn that a third of Carillion contracts were taken out by the Labour party, knowing well that they would have been opposed by Corbyn.
I would imagine that up until 2010 Carillion was doing okay.

It's impossible to find out if any member of the government has shares in Carillion, as all their shareholdings are in blind trusts.

Is that because Corbyn doesn’t consider himself a member of the Labour Party? He certainly opposed most of what the LP voted for, all of his life on the back benches.

No he didn't, lemon. He opposed some of what the Labour party under Blair voted for.
If you are going to make statements like that, at least get your facts right.
It was Tony Blair who said he was creating a new labour party, after all.
Corbyn just stayed in the old one, and waited for it to re-emerge.

I don't know why you are bothered, as you have never voted Labour in your life.

Both parties changed. Pre Thatcher most people agree that a mixed economy was best for the country.

The Labour party was the Labour party whatever it called itself. I didn't notice a mass exit of MPs, including Corbyn, when TB became its leader.

The fact that one hasn't yet voted for a party does not mean that one will not in the future. Any open-minded person, including those supporting other parties, surely looks at the promises of every party at an election before making their final voting decision. As we have seen parties change so much. Labour - New Labour - Labour, but not the same. The same with the Conservatives, Centrist/mixed economy Conservative, Thatcherite, even more Thatcherite topped with a liberal social froth.

The Labour party was the Labour party whatever it called itself. I didn't notice a mass exit of MPs, including Corbyn, when TB became its leader.

What has that to do with Carillion and outsourcing/privatising public services or not/or actually having state run services for all. I'm sure it must have something but I think I missed it.

Not true, Monica. Tony Blair said we have a new party, New Labour.
Tony Benn said that was good as he was not a member of New Labour and was never going to be one.

GracesGran, I was saying that May said that the Labour party agreed to a third of Carillion's contracts, but it was New Labour, not Corbyn's Labour. Lots of people have commented on that on various websites, so I wasn't the only one who noticed.

Corbyn would never have voted for outsourcing, being a strong union man.

The groups that work in the public services, school cleaning and catering, etc., should become worker co-operatives.

I worked in hospitals when the 'hotel services' were 'in house'. I never could see why anyone thought that a private company, who had to make a profit out of providing the service, could do it any better or any more cheaply. There wasn't any apparent waste or inefficiency when it was in house.

I also worked in a school which had its catering 'privatised'. As I recall, we still had to pay the private company out of our budget, which didn't actually save us any money and the food was so poor we took it back in house anyway after a few years; I believe at a saving. I can't remember how we paid the company (annually or monthly?), but there is no reason why, if payments to Carillion cease, a school couldn't take back responsibility for their own catering, paid for by what would have gone to Carillion. (For some reason our school cleaning and maintenance was never privatised...)

I think what needs to be remembered is millions of jobs with these contracts are low paid. The jobs were low paid when they were in house and remain low paid for the contractors. These are low profit contracts from the start and the only way to make money is to employ less people to get the job done. There's no job security, no prospect of progression and no job satisfaction. All excellent reasons for high staff turnover. That's not going to provide the quality service TM talked about today (or at any other time).