‘A watershed moment’

As construction and outsourcing firm Carillion collapsed into liquidation yesterday (January 15), Labour leader Jeremy Corbyn called for an end to privatisation of public services.

In a video watched by hundreds of thousands of people, Corbyn said, “In the wake of the collapse of contractor Carillion, it’s time to put an end to the rip-off privatisation policies that’s done serious damage to our public services and fleeced the public of billions of pounds.

“This is a watershed moment,” he added.

The call came as the government scrambled to manage the chaos of the Carillion crisis, which has seen 20,000 direct jobs in the UK now at risk – and an estimated 30,000 businesses in the supply chain are also under threat as creditors of the firm.

Fears over the running of public services in the immediate aftermath of the Carillion’s collapse are running high – Oxfordshire County Council took the remarkable step of putting firefighters on standby to deliver school meals Carillion had previously been contracted to undertake.

In an emergency meeting last night, Cabinet Office minister David Lidington was grilled by Labour MPs over what’s been seen as rank government failure to see the crisis coming when there were obvious warning signs.

Carillion had issued three profit warnings last year – but even so the government continued to hand over contracts for public services to Carillion.

Now, it’s been estimated that the taxpayer may have to foot a bill to the tune of hundreds of millions in the aftermath of the Carillion crisis.

Lidington confirmed last night that all public services previously run by Carillion will for now be run and paid for by the government, including the wages of tens of thousands of Carillion workers on public contracts.

Those Carillion workers on private contracts, however, will have their wages guaranteed for only 48 hours – if other businesses involved in Carillion contracts do not step in to pay their wages by tomorrow, these thousands of workers would be out of a job, Lidington noted.

‘Shudder of fear’

He added that a Job Centre helpline will be available to these workers – to which shadow Cabinet Office minister Jon Trickett responded that this would “send a shudder of fear” through workers over their future.

Trickett demanded to know why for three months, Carillion was not overseen by a Crown representative, which is normally the case, especially for such a big contractor – instead, the post was left vacant.

He likewise criticised the government for failing to involve trade union representatives in the aftermath of the crisis.

Other Labour MPs in last night’s emergency meeting highlighted how the collapse of Carillion showed that the underlying logic of Private Finance Initiatives (PFIs) is flawed – and called for a tax on PFI operators.

“The accounts show that in the last four years, on the PFI contracts alone, Carillion was part of deals that have made nearly £1bn in profit directly from the public purse,” said Labour MP Stella Creasy.

“It is now clear that the notion, which all governments have dealt with, that PFI is a good way to transfer risk to the private sector is a myth,” she added. “Will the government finally bring in a windfall tax to claw back the money so desperately needed for our public services from these companies?”

Corbyn pledged last night that a future Labour government would end PFIs once and for all.

“It’s time we took back control,” he said. “We need to not only guarantee the public sector takes over the work Carillion was contracted to do but goes much further and ends contracts where costs spiral, profits soar and services are hollowed out.

“Labour will end the Private Finance Initiative rip-off, put an end to the private-profit-is-best dogma and run our public services for the benefit of the many, not the profits of the few.”

This morning, Unite general secretary Len McCluskey, in an interview on ITV’s Good Morning Britain, also highlighted the problems with private contractors running public services, and he lambasted the government for its failure to see the Carillion crisis coming.

“Why did government continue ignoring the signs?” McCluskey noted. “In 2013, the City started betting against Carillion – they thought it was overstretched.”

He also added that it defied logic that for three months there was no Crown oversight of Carillion at a time when it was obvious to all that the company was in deep financial trouble.

‘Ministers cannot dodge their responsibilities’

“Ministers cannot dodge their responsibilities,” he said. “For three months we had no Crown overview – there’s supposed to be a civil service overview of these massive contracts of billions of pounds of taxpayers’ money. The government failed to have an overview during a highly volatile situation.”

While saving people jobs should now be the primary priority, McCluskey said that afterwards, “we have to open up a debate about private companies in public services.”

“In public services, you’ll get private companies who are less concerned about delivering a quality service – and more concerned about driving profit and dividends back to the shareholders,” he told Good Morning Britain.

Meanwhile, the TUC today called for the immediate establishment of a Carillion taskforce, one which would involve trade unions to give workers certainty over their jobs, wages and pensions and would bring Carillion’s public-sector contracts back in-house.

The TUC also called on the future taskforce to support the transfer of private sector contracts to alternative providers with jobs, pay and pensions protected, among other aims.

“We urgently need a national task force involving unions to safeguard jobs, services, and pensions,” said TUC general secretary Frances O’Grady.

“Workers can’t be left at the back of the queue,” she added. “Each and every worker at Carillion needs to know where they stand. They have bills and mortgages to pay, and deserve certainty on their future.

“And we have to ensure that there aren’t more Carillions on the horizon. That means an immediate risk assessment of all large outsourcing firms with government contracts. Public services are already under pressure, and can’t take another hit like this.”

Watch the full Good Morning Britain interview with Unite general secretary Len McCluskey here.