“[John Manzoni the civil service chief executive]said [to the Public Accounts Committee] that it was not until November that officials “really started to notice” the problems at Carillion, whose chairman, Philip Green, is an adviser to the prime minister on corporate responsibility.
Between July and November, Carillion issued three major profits warnings and its shares crashed by 91%.”
“George Osborne’s Evening Standard editorial on Carillion today: “Why has the state found itself so dependent on a few very large outsourcing firms? The failure to use a variety of smaller, mid-size companies undermines innovation and leaves services hostage when things go wrong.”
George Osborne, signing off on another Carillion contract as Chancellor in 2014: “It is great to see successful companies like Carillion winning contracts around the world. This deal, the first in a pipeline of many, will help us reverse the age-old trend of not exporting enough, boosting growth and creating jobs.”
He even wore their hat…”
https://order-order.com/2018/01/15/osborne-on-carillion-then-and-now/
Professor John Colley of Warwick Business School says Carillion was sunk by two serious mistakes:
“Too many contracts were taken at poor margins and terms, which prevented any subsequent profitability under competitive pressure. Some were allocated during the recession when it was win work at all costs.
“The other key issue is project accounting, which tends to recognise losses late in the project, effectively when the project starts to run out of money. There will no doubt be serious retrospective scrutiny of the accounting.”
and
Guardian columnist Simon Jenkins:
“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.
and
Peter Kitson, Partner at law firm Russell-Cooke, says Carillion may have caused its own demise by pitching its services at an uncompetitively low rate – to win business.
”The procurement rules (the Public Contracts Regulations) which govern public sector procurement are central to understanding what has happened here. Almost all Carillion contracts have been competitively tendered under those procurement rules.
The rules require public sector clients to investigate and possibly to exclude any tenderer whose bid is ‘abnormally low’. One contributory factor here may be that Carillion has tendered at very low margins, possibly unsustainably low, in order to win these huge volumes of work.
If such bids have succeeded, that can only mean either than the Regulations themselves are ineffective or that public sector clients lack the confidence or the expertise properly to enforce those rules.
Following this morning’s announcement, I am sure that many of those public sector clients will be seeking advice on the extent to which those same procurement rules allow short term emergency replacement contracts to be let without formal procurement.”
When our MPs tell us that we in Devon are receiving an extra £7.5 for education, perhaps point this out to them:
“The Government’s new national funding formula will mean an extra £7.5million for schools in Devon next year.
But they will still be left £268 per pupil short of the national average, say Devon County Council. …”
http://www.devonlive.com/news/devon-news/devon-schools-worse-those-london-1067723
Fair?
Owl says: Amazing how some district councillors can change their attitudes when EDDC development is in THEIR town’s back yard!
“Town councillors have again refused to support an application for temporary attractions on Exmouth seafront.
Planning committee members decided not to support the proposal to install pop-up food outlets and a large to screen to show live sport, such as World Cup football matches, at the former fun park site in Queen’s Drive.
If given the go-ahead, East Devon District Council’s (EDDC) plan could also see the former boating lake filled in for a hard or soft seating area and a fenced-off children’s play zone created.
The current proposal is a full application and town councillors have suggested that it should be reverted to an outline plan. They say it could progress to a full proposal, with more detail, later.
The amended plans now include a letter intended to dispel previous objections over the lack of information in the application and the permanent infilling of the boating lake.
EDDC says the lack of detail was due to a ‘tight timescale’ and there is no ‘specific engineering solution’ for how the infilling will take place.
Objecting to the installation of the big screen, Nick Hookway, chairman of campaign group Save Exmouth Seafront, pointed out that an extensive environmental monitoring programme had previously been recommended for the site.
He said: “I think that the presence of a large number of people on that site will be highly damaging to that site itself.
“Will this present application prevent damage to the site or merely get the public to do the council’s work?
“Will this application have the same environmental mitigation conditions that the reserve matters application had?”
Exmouth Town Council Planning Committee members voted to oppose the amended proposals, saying the blueprint has not answered their original concerns and the plan should come back as an outline application.
In the additional information, EDDC says it wants the application to be decided on by its development management committee in March.
Councillor Bill Nash said: “March is plenty of time for this application to come back in to this committee as an outline application, which I think would be considered properly and probably be acceptable.”
Carillion bid for, and got, many big contracts to offer privatised services in every part of the UK. While it was making profits, these were creamed off first by directors and then by shareholders with a good slice for donations to the Tory party and as little as possible to taxation.
Directors changed its rules to eliminate or vastly reduce their risks (see below). When it went bust, it was “too big to fail” so now the Tory government – which believes, or so it says, in the “free market” and DEFINITELY NOT in nationalisation – picks up the tab and we, the taxpayers, pay for its failure.
Can anyone tell Owl the difference between Carillion and Accountable Care Organisations for the NHS? Big contracts to be offered to privatised services such as Virgin Care, to offer their privatised services all over the UK, where once again, directors cream off the first layer of profits and shareholders the rest. Though in the case of Branson and Virgin HE pays no tax.
What incentive do they have to keep costs down and quality up. when, if they fail, we pick up the tab?
Imagine if this was happening under Corbyn. Who would the Conservatives be blaming? What would they be saying if his government was picking up the bills.
This is NOT a homily to Corbyn – just saying!
Bernie Sanders lost to Hillary Clinton to be Democratic nomination for the US presidential election:
“… Difficult as it is to comprehend, the fact is that the six richest people on Earth now own more wealth than the bottom half of the world’s population – 3.7 billion people. Further, the top 1% now have more money than the bottom 99%. Meanwhile, as the billionaires flaunt their opulence, nearly one in seven people struggle to survive on less than $1.25 (90p) a day and – horrifyingly – some 29,000 children die daily from entirely preventable causes such as diarrhoea, malaria and pneumonia.
At the same time, all over the world corrupt elites, oligarchs and anachronistic monarchies spend billions on the most absurd extravagances. The Sultan of Brunei owns some 500 Rolls-Royces and lives in one of the world’s largest palaces, a building with 1,788 rooms once valued at $350m. In the Middle East, which boasts five of the world’s 10 richest monarchs, young royals jet-set around the globe while the region suffers from the highest youth unemployment rate in the world, and at least 29 million children are living in poverty without access to decent housing, safe water or nutritious food. Moreover, while hundreds of millions of people live in abysmal conditions, the arms merchants of the world grow increasingly rich as governments spend trillions of dollars on weapons.
In the United States, Jeff Bezos – founder of Amazon, and currently the world’s wealthiest person – has a net worth of more than $100bn. He owns at least four mansions, together worth many tens of millions of dollars. As if that weren’t enough, he is spending $42m on the construction of a clock inside a mountain in Texas that will supposedly run for 10,000 years. But, in Amazon warehouses across the country, his employees often work long, gruelling hours and earn wages so low they rely on Medicaid, food stamps and public housing paid for by US taxpayers.
Not only that, but at a time of massive wealth and income inequality, people all over the world are losing their faith in democracy – government by the people, for the people and of the people. They increasingly recognise that the global economy has been rigged to reward those at the top at the expense of everyone else, and they are angry.
Millions of people are working longer hours for lower wages than they did 40 years ago, in both the United States and many other countries. They look on, feeling helpless in the face of a powerful few who buy elections, and a political and economic elite that grows wealthier, even as their own children’s future grows dimmer.
In the midst of all of this economic disparity, the world is witnessing an alarming rise in authoritarianism and rightwing extremism – which feeds off, exploits and amplifies the resentments of those left behind, and fans the flames of ethnic and racial hatred. …
… Taking on the greed of Wall Street, the power of gigantic multinational corporations and the influence of the global billionaire class is not only the moral thing to do – it is a strategic geopolitical imperative. Research by the United Nations development programme has shown that citizens’ perceptions of inequality, corruption and exclusion are among the most consistent predictors of whether communities will support rightwing extremism and violent groups. When people feel that the cards are stacked against them and see no way forward for legitimate recourse, they are more likely to turn to damaging solutions that only exacerbate the problem.
This is a pivotal moment in world history. With the explosion in advanced technology and the breakthroughs this has brought, we now have the capability to substantially increase global wealth fairly. The means are at our disposal to eliminate poverty, increase life expectancy and create an inexpensive and non-polluting global energy system.
This is what we can do if we have the courage to stand together and take on the powerful special interests who simply want more and more for themselves. This is what we must do for the sake of our children, grandchildren and the future of our planet.”
East Devon Watch 