Just when the May government thought the horrors of Grenfell Tower might be fading in the public’s mind, and they had convinced themselves (however implausibly) that they could see a speck of light at the end of the Brexit tunnel, along comes the collapse of Carillion Britain’s second-largest construction company, writes Alan Davies. It had 20,000 employees in Britain with 62 percent of its workers in the private sector. All of these now face uncertainty not only over their jobs but their pensions as well.
Nothing can match the horrors of Grenfell, of course, in terms of a metaphor for 30 years of rabid, austerity based, deregulated, privatised, profit driven, capitalism and its impact on public housing and the poorest and most vulnerable in society.
Carillion, however, runs it close. Carillion highlights everything wrong with a system of private sector greed alongside years of public sector austerity. Already, as workers are laid off by the thousand and sub-contractors go to the wall, the vultures are out seeing what assets can be stripped and what contracts can be picked up at rock-bottom prices.
Carillion has been a first-choice company for escalating outsourcing, first by New Labour and then by the Tories. They had service contracts with hospitals, schools and prisons, and a part of the contract to build HS2.
The firm collapsed when last-ditch talks with its lenders and the government failed. It took billions in public money. It’s one of the biggest suppliers of services to the public sector with over 450 public sector contracts including some of the biggest.
The Tories continued to award work to Carillion after it was already clear that it was in financial trouble and its shares had collapsed by 90 per cent. Just a week after a profit warning in July, the government named Carillion as one of the winners of £6.6 billion worth of contracts to deliver part of the new HS2 rail line. Transport secretary Chris Grayling defended the decision, saying the government had received “secure undertakings” that the contracts would be delivered. In November, following yet another profit warning, the beleaguered firm bagged two contracts with Network Rail, worth £320 million.
Carillion was hated by trade unionists in the construction industry long before its collapse because it was a key part of the notorious practice of blacklisting. Blacklist support group founding member Dave Smith wrote in a recent Metro about his victimisation for raising health and safety concerns – in an industry which sees the largest number of deaths at work of any in Britain.
The Carillion crisis has opened up a debate, on the media and beyond about privatisation – and even about capitalism itself. The left needs to make maximum use of this opening to discuss general political questions with people who would usually say they aren’t interested in politics.
Left foot foward reports that ‘Polling figures show 68 per cent of people think PFI should be banned outright – this figure was 73 per cent in Scotland’. Will Hutton pointed out in The Observer that ‘The taxpayer is up to £150bn out of pocket as a result of PFI’ – not just from Carillion’s rip offs but the whole lot of them. Yes some companies are particularly voracious or anti-union but putting profit before people is what they exist for.
Stagecoach and Virgin say they walked away from their East Coast mainline contract to avoid the £2bn of contract payments that were due in the next few months. Yet despite that Grayling has refused to rule them out of further contracts! And passengers know that the line that delivered a better service when it was taken back into public ownership between failed privatisations. It’s not just bad eggs but the whole rotten system.
That is what we need to explain when commentators ask whether private finance isn’t needed to make sure we have schools and hospitals. The reality is both that government can borrow more cheaply than anyone else and that we will be paying through the nose for the crimes of these asset strippers for generation to come.
Jeremy Corbyn, John McDonnell and their team understand all the issues at stake very well and have responded very strongly. They have drawn all the right conclusions and have strengthened their argument against privatisation and in favour of the public sector.
On Marr on Sunday on January 21, McDonnell repeated his pledge made at Labour Party conference in October to end private finance initiatives and bring them all in house. He rejected privatisation and pledged big investment for the public sector once Labour is in office. Jeremy said: ‘ Labour will rewrite the rules to end this rigged system and take back control from private companies that exploit public service contracts for their own gain.’ Corbyn said that the collapse of Carillion is a watershed moment. It is all our jobs to work alongside him to make sure that is true
The unions must stiffen their response and organise collectively to demand all these services are taken back into public ownership. The collapsing NHS and general state of public services, not least adult social care, is the responsibility of the private companies that have bled them of money and those governments which have presided over the gathering, self-generated, catastrophe.
We need a Labour Government as soon as possible of course. But the way to create the best chance of that happening is to make sure that in the meantime we build the broadest possible alliance to oppose the relentless austerity drive of the Tories – including by making sure the February 3 demo to defend the NHS is as massive as it can possibly be.