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You can find the current article at its original source at https://www.theguardian.com/commentisfree/2018/jan/15/carillion-failure-contracts-government-whitehall
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| I’m not surprised by Carillion’s failure – companies like this shouldn’t exist | I’m not surprised by Carillion’s failure – companies like this shouldn’t exist |
| (25 days later) | |
| No one ever lost money doing business with the government: it was too stupid and had too much money. So went the old saying. Carillion has just proved it wrong. Britain’s second biggest construction company and state contractor has gone into liquidation. Accountants must reallocate to other firms the billions of pounds in contracts for prisons, schools, hospitals, railways and military bases. It must somehow underpin these contracts, which will cost money. Fiasco or not, the nation’s business must go on. | No one ever lost money doing business with the government: it was too stupid and had too much money. So went the old saying. Carillion has just proved it wrong. Britain’s second biggest construction company and state contractor has gone into liquidation. Accountants must reallocate to other firms the billions of pounds in contracts for prisons, schools, hospitals, railways and military bases. It must somehow underpin these contracts, which will cost money. Fiasco or not, the nation’s business must go on. |
| The company’s demise is attributable to favouritism, cost escalation, excessive risk, and obscene remuneration | The company’s demise is attributable to favouritism, cost escalation, excessive risk, and obscene remuneration |
| The fate of Carillion does not undermine privatisation. Gargantuan profits made at the taxpayers’ expense long pre-dated Thatcherism – witness the cost-plus rackets in defence procurement, NHS pharmaceuticals, road-building and public housing. During the last mass public-sector construction, 1970s’ hospitals, some of the costliest, ugliest and least efficient buildings in the land were built. | The fate of Carillion does not undermine privatisation. Gargantuan profits made at the taxpayers’ expense long pre-dated Thatcherism – witness the cost-plus rackets in defence procurement, NHS pharmaceuticals, road-building and public housing. During the last mass public-sector construction, 1970s’ hospitals, some of the costliest, ugliest and least efficient buildings in the land were built. |
| What the Carillion saga demonstrates is the rampant indiscipline in the contracts themselves. The company’s demise is attributable to favouritism, cost escalation, excessive risk, obscene remuneration and reckless indebtedness. Carillion and its bankers clearly thought it too big to fail. Whitehall behaved accordingly. It was like a pre-2008 bank. | What the Carillion saga demonstrates is the rampant indiscipline in the contracts themselves. The company’s demise is attributable to favouritism, cost escalation, excessive risk, obscene remuneration and reckless indebtedness. Carillion and its bankers clearly thought it too big to fail. Whitehall behaved accordingly. It was like a pre-2008 bank. |
| There must now be a review of how privatisation is working. Its so-called parastatal companies are not true private entities. They depend on the state, and the state depends on them. Their lobbyists develop an unholy relationship with ministers and officials – witness the uncontrolled revolving door between Whitehall and the boardrooms. | There must now be a review of how privatisation is working. Its so-called parastatal companies are not true private entities. They depend on the state, and the state depends on them. Their lobbyists develop an unholy relationship with ministers and officials – witness the uncontrolled revolving door between Whitehall and the boardrooms. |
| How to find the ideal mix of public sector loyalty and private sector incentive has bedevilled state procurement since the dawn of time. But there should be clear rules, as with monopoly regulation, such as limits on market dominance, debt and remuneration. The administrators will doubtless rescue the contracts, and the 20,000 workers, now floating on dud credit. But it must be wrong for the officials – and ministers – responsible for this fiasco to go free of accountability. Who agreed these contracts, and why? | How to find the ideal mix of public sector loyalty and private sector incentive has bedevilled state procurement since the dawn of time. But there should be clear rules, as with monopoly regulation, such as limits on market dominance, debt and remuneration. The administrators will doubtless rescue the contracts, and the 20,000 workers, now floating on dud credit. But it must be wrong for the officials – and ministers – responsible for this fiasco to go free of accountability. Who agreed these contracts, and why? |
| The Carillion affair must deliver at least some return to the public, that of a painful lesson learned. And we must know what it is. | The Carillion affair must deliver at least some return to the public, that of a painful lesson learned. And we must know what it is. |
| • Simon Jenkins is a Guardian columnist | • Simon Jenkins is a Guardian columnist |