Carillion collapse. Is this the end of PFI?

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  • Cabinet ministers have concluded a crisis meeting about keeping vital public services going after the collapse of contractor Carillion.

    The construction giant, which provides services for schools, prisons and hospitals, has gone into liquidation.

    A rather good report on Newsnight last night.


    They reckoned it was due to the government getting more aggressive at driving prices down that directly led to the collapse of this company. They think that the government has gotten a lot better in recent years at getting a better deal for taxpayers by only awarding contracts to the lowest bidder. All sounds good to me, except...


    The government was warned that current arrangements for public/private finance initiatives were not sustainable, it was a race to the bottom. They were warned that companies were only having a tiny profit margin and by winning the government contracts because they put the lowest bid in, Carillion were shooting themselves in the head. So, is it all the government's fault then for demanding ever lower prices on government contracts?


    What about the fat cat salaries of its bosses? They paid themselves huge wads of money and issued dividends to shareholders despite knowing about the massive deficit in the pension scheme and basically carried on regardless. Finally, a matter not touched upon yet by the media - the accountants and regulators. Where were they when the black hole in Carillion's pension pot was getting ever wider?

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  • It may not be the end of PFI but it is certainly as Heath said of another scandal, "the unpleasant and unacceptable face of capitalism".


    Grayling needs to face a Parliamentary committee as to why he approved of new contracts being entered into with a struggling company.It seems that Carillion had fingers in hundreds of pies from libraries , to hospitals, to prisons and school meals. Why were the government giving so much responsibility to one company? It strikes me that there is something rotten in the state of Britain. We need a full public inquiry and investigation into this. As to the management securing their own salaries and pensions while the workers may lose theirs , a policed investigation should be undertaken.

  • Many of the politicians end up with jobs at such companies and some current politicians especially those from the Lords have currents roles in some of these companies and/or overseas PFI contracts. Look up the term: NED (non-executive director) for public appointments.


    These are the current vacancies for all public appointments, the top jobs go to the politicians and their friends:


    https://publicappointments.cabinetoffice.gov.uk/all/

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  • The relationship between these companies and serving politicians certainly needs a light shone on it. That Carillion was in some trouble seems to have been common knowledge in the City as shrewd investors had been selling Carillion short for the past three years. There is also a question to ask of the auditors that signed off the books as Kosher.


    Labour are playing party politics with this but 30% of the current contracts were signed off under their tenure and as recently as last week Leeds City council (Labour) approved Carillion for a £14m road contract. Somebody wasn't listening to the mood music.


    Whitehall is where people should be looking as it's civil servants that do all the contract specifications.

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  • Because they're behind the knuckle draggers from TVL one doesn't feel much sympathy. :/

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  • As I said in the OP, is this the end of PFI? (or whatever the term they use now: public, private partnerships)


    There's about six companies that do all these government contracts whether it's building hospitals or providing cleaners for them to things like doing assessment for disability payments.


    G4S (the merger of Group 4 and Securicor) is another one of these compactness that provides outsourced government services, but doesn't do construction work as far as I can tell.

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  • I think for services it will continue as the private sector is just more efficient cost wise at doing this. There are also many players in the field even down to local providers so if one company goes bust there are plenty more ready to step in.


    When it comes to long construction projects that overall end up costing the earth and also collapsing if the company goes bust, the enthusiam will be tamed.

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  • Because they're behind the knuckle draggers from TVL one doesn't feel much sympathy. :/

    Capita's problems are continuing:


    Capita has reported a £513m annual loss as the outsourcing firm set out plans to revive its indebted business.

    Profits were wiped out by £850m of one-off costs, mainly from writing down the value of acquisitions made under its previous management.

    The company said it would raise £701m through a rights issue to fund a reorganisation of the business.

    The article goes on to say that Capita's boss denies any similarity between the fate of his company with that of Carillion, yet with £1.7bn debt, it doesn't sound good for them.


    I'm far from a champagne socialist, but why is a private company needed to collect the licence fee, or London congestion charge or monitor those who have been tagged? If these companies keep going bust and it all ends up back with the State, it will be taxpayers facing far higher costs in the end.


    I think Blair's legacy of bringing in private organisations to carry out functions that the government used to do, has yet to be fully played out.

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  • Interserve: Major government contractor 'seeks second rescue deal'

    One of the UK's largest providers of public services is seeking a rescue deal as it struggles with £500m of debt, according to the Financial Times.

    Interserve, which works in prisons, schools, hospitals and on the roads, said it might look for new investment or sell off part of the business.

    The company has tens of thousands of UK employees, including workers at the Foreign Office and the NHS.

    Blair's legacy of private/public partnerships seems well and truly over now, especially when the government especially when the chancellor announced last month that he would never sign a new PFI/PPP deal again.


    What next?

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  • What next?

    Capita need to go belly up. All those unemployable knuckle dragging TVL bozoes.^^

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  • I don't know what's happened about Capita, Heero, beyond that story I posted in April. I assume they are still solvent for now.

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