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Outsourcing Carillion’s collapse illustrates all that’s wrong with the Tory economic model

The failure of Carillion is about far more than the failure of a company. It is about the failure of free market dogma, writes RICHARD BURGON

AS shadow secretary of state for justice, I have seen how well Carillion bosses have done out of our prisons system. Sadly, our prisons system hasn’t done too well out of Carillion. In just over two years, the Conservative government has given almost £100 million to Carillion to maintain our prisons. 

Prison governors are among those who repeatedly complained about Carillion’s failures in prison maintenance. 

The situation became so bad that in September 2016 even the then Conservative prisons minister Sam Gyimah commented: “I am particularly concerned about the rate of repairs in our prisons,” going on to say that “Carillion is one company that has a contract and receives public funds to perform such work, and I have not been impressed by what I have heard about its response speed.”

The problems continued and February 2017 Gyimah reported that “the performance of Carillion caused sufficient concern that I met with Carillion senior executives to set out our expectations for immediate service improvement.” But following assurances from Carillion, in 2017 the Conservative government gave it nearly £40m to carry out maintenance work in our prisons. 

Under outsourcing, cells were left unusable with windows broken and prisoners unable at times to even get access to basics like towels and soap. 

And despite this the promised savings didn’t even materialise with the Ministry of Justice admitting that it had got its figures wrong when planning the contracts. 

That’s why at the Prison Governors Association conference back in October I announced that a Labour government would look at how to take such private service contracts in our prison service back into public ownership.  

The government must now ensure that Carillion prison maintenance contracts are brought back in-house.

But expensive prison maintenance contracts are just one element of Carillion’s relationship with the state. 

Carillion’s contracts with the public sector are enormous. The Tories even awarded Carillion £2 billion worth of contracts even after the firm started to issue profit warnings. 

As well as prison maintenance, Carillion has become deeply embedded in our hospitals, in our schools and in the building of HS2. Carillion even ended up being paid for work on army bases. 

The collapse of Carillion illuminates much of what is wrong with the current economic model that the Conservative ideologues are so attached to, despite its clear record of failure. 

It also sheds light upon a problematic relationship that has existed between the state and the private sector for far too long. 

The failure of Carillion is about far more than the failure of a company. It is about the failure of an idea. It is a case study for the fact that the free market fundamentalist dogma of “private sector good; public sector bad” flies in the face of the objective evidence. 

More and more people are now questioning the wisdom of privatisation after privatisation and more are now seeing the folly of incessant outsourcing.

In justice alone, in recent months G4S was awarded a £25m government tagging contract despite being subject to an ongoing Serious Fraud Office inquiry; ministers used the summer break to sneak out plans to privatise the bailiffs who collect court fines; and the privatised probation companies got a bailout of over £300m despite grave concerns over their ability to keep the public safe. 

In his response to the collapse of Carillion, Jeremy Corbyn hit the nail on the head when he described this as a “watershed moment,” adding that “across the public sector, the outsource-first dogma has wreaked havoc” and that “often it is the same companies that have gone from service to service, creaming off profits and failing to deliver the quality of service our people deserve.”

The Conservative government is indeed full of free market fundamentalists. But while they believe in leaving working people and their families to the mercies of the free market, they also believe the state is there to help big business. 

There are huge companies who have been gifted by their political allies what is essentially a parasitical relationship with the state. 
Rather than innovating and creating new markets, they instead feed off the state as part of a desire — shared with their political allies — to create a “risk-free” capitalism, but only for those at the very top. 

As Labour leader, Jeremy has pointed to “the up to £2bn public bailout of Richard Branson’s Virgin and Stagecoach for their own failure to run East Coast rail properly” and “the scandal of the NHS being sued by private companies like Virgin after losing a contract bid.” 

Carillion bosses have put so many others at risk but have of course looked after themselves. Carillion’s directors pocketed millions in bonuses despite the company’s failure. 

Now tens of thousands of Carillion workers are worried about their futures and small businesses and people who are subcontractors are not getting paid. 

Corbyn is right to call for Carillion bosses to hand back their bonuses. People are increasingly frustrated by people getting richer and richer in an environment that the state has helped to create but who aren’t willing to pay their own way or meet their obligations to their staff, our public services or wider society.

It’s time for an end to the era of eye-watering cuts for our public services and the state seeing its role being to transfer huge sums of money from the public purse into the private pockets of the fat cats.   

A Labour government led by Jeremy Corbyn will end the PFI rip-off, consign the “private-profit-is-best” dogma to the dustbin of history and ensure that our public services are run for the benefit of the many, not the profits of the privileged few. 

There are some things that should not be subjected to the profit motive. There are some things that should always be in public hands. 

The privatisation dogma has failed the test of delivery and the test of efficiency. Modern public ownership must have a key role in our economy in the 21st century.

Richard Burgon is shadow secretary of state for justice. He writes every other Thursday in the Morning Star.


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