Friday, January 12, 2018

Aditya Chakrabortty -The company that runs Britain is near to collapse. Watch and worry

Carillion builds schools, roads, hospitals – and it’s meant to be a big part of HS2. What’s more, if it goes bust, the bill will be picked up by taxpayers


It looks like the usual load of shady deals. Maybe there are some things that the government can do much better than the private sector? 

You may never have heard of Carillion. There’s no reason you should have. Its lack of glamour is neatly summed up by the name it sported in the 90s: Tarmac. But since then it has grown and grown to become the UK’s second-largest building firm – and one of the biggest contractors to the British government. Name an infrastructure pie in the UK and the chances are Carillion has its fingers in it: the HS2 rail link, broadband rollout, the Royal Liverpool University Hospital, the Library of Birmingham. It maintains army barracks, builds PFI schools, lays down roads in Aberdeen. The lot.

There’s just one snag. For over a year now, Carillion has been in meltdown. Its shares have dropped 90%, it’s issued profit warnings, and it’s on to its third chief executive within six months. And this week, the government moved into emergency mode. A group of ministers held a crisis meeting on Thursday to discuss the firm. Around the table, reports the FT, were business secretary Greg Clark, as well as ministers from the Cabinet Office, health, transport, justice, education and local government. Even the Foreign Office sent a representative.

Why did Chris Grayling give the HS2 contract to a company that was already in existential difficulties?

After all, this isn’t the only case where the public sector’s reliance on one giant private-sector player endangers the provision of basic services. As my colleague Rob Davies reports in today’s paper, crisis-hit Four Seasons Health Care has run into yet another roadblock in its rescue talks. If those negotiations fail, then the big question will be who will look after the 17,000 elderly and vulnerable people in its care.

The Guardian

Aditya Chakrabortty -The company that runs Britain is near to collapse. Watch and worry

4 comments:

Neil Wilson said...

It would really help if journalists learned that a company and its businesses are two separate things. You can put the company into administration, and the businesses that continue to make money can continue - run by the administrator.

What all this commentary is about is trying to bounce the government into bailing out Carillion shareholders, bondholders and the banks that lent to them. That should not happen.

Capitalism without bankruptcy is like Catholicism without hellfire. It doesn't work as a concept.

Kaivey said...

"What all this commentary is about is trying to bounce the government into bailing out Carillion shareholders, bondholders and the banks that lent to them. That should not happen."

I didn't read it like that, but if so, that is terrible.

Matt Franko said...

Reads like the way they did it they made the firms pay for the franchise up front...

Should best have the govt only get munnie out of revenues from fares and even then AFTER the munnie is paid for operations and set aside for future maintenance...

Sounds like a bad deal structure from the beginning...

Noah Way said...

My first thought was bailout. Capitalism privatizes profits and socializes losses.