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Bedlingtonian

Carillion: Watershed Moment For Privatisation?

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Perhaps all political parties should agree to review private sector involvement in public services in Northumberland.

In the case of Carillion I see that the role of the directors will be subject to an investigation in addition to the company itself. 

Edited by Bedlingtonian

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This highlights the weakness and short sighted-ness of government policy. to say nowt of costing us more versus direct labour. Yet another of Thatchers many legacies that have come to bite us on the bum. As for the directors, I notice that one Phillip Green is involved, and that Carrillion's pension fund is in deficit. Coincidence?

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Essential services should be (where practicable) not be privatised, Schools, Prisons, Hospitals, Doctors Surgeries, etc.. Of course many of these are sadly were privatised in the 90's/early 00's and are subject to PFI agreements where the taxpayer pays through the nose while bending over.

Really weird how these private companies can go under so easily though, and the public 'companies' seem to increase their running costs exponentially yet we get less and less 'value' from their services - Of course they can't go under as our money seems to be free rein for taxation.

And then there is Arch..... I'd like to see that properly investigated and come to a conclusion where those responsible are punished in accordance with the law and hopefully they're made to pay back and give back assets to us.

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I think the Carillion failure highlights a problem with HOW the contracts are awarded.  The government actually encourages shaky companies to underbid, as a large government contract provides them with cash flow to try to dig themselves out of trouble. 

The government is a monopoly buyer in these circumstances and could easily draft a contract which avoids this pitfall.  The contracts should require that when public funds are involved public money is placed in escrow in favour of subcontractors and their employees, any use of those funds to shore up the main contractors balance sheet should be declared fraudulent and therefore a criminal offence. The government could also dictate the maximum delay in paying subcontractor's invoices.  Superficially this would add to the cost of the contract, but in fact those costs wouldn't be anything like they first appear because it would give smaller subcontractors more incentive to enter the market and lower costs that way - I'm told that many subcontractors simply refused to deal with Carillion because of their ridiculously extended payment periods, and any sensible subcontractor would factor the finance costs into their bid.

The argument about public/private is all rather artificial, because at some point everything in government is furnished by privately controlled resources.  Blair's Labour government rightly recognised this, but as is usual with our politicos they went totally overboard in favour of what "seemed like a good idea at the time".  The government should be encouraged to carry out limited experiments with public funds, but these experiments shouldn't become general public policy until the results are in.  This, of course, doesn't suit the "I have all the answers" politicos.

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