Monday, 22 January 2018

Carillion Collapse Update

Carillion plc has often been described as "one of the biggest companies in the world that you've never heard of". Today everybody knows its name. The negotiations of the last few weeks have failed to come up with a rescue package and so Carillion is officially in liquidation. On the morning of January the 15th it issued an administration notice to the London stock exchange and all its asset holders have been notified. Two other companies in the construction sector, Balfour Beatty and Galliford Try, have been given extra cash contributions to complete the highway projects Carillion were carrying out. The costs so far are about thirty-five million pounds. I image the same deal will be organized for the support services it is involved in, such as the Facilities management at NHS hospitals. Carillion employees are still being paid. Yesterday I saw a Carillion van parked outside a student accommodation block under construction. I have heard from an informant inside JR Portering that their management are still on site until at least the 16th of February; after that, nobody knows. Obviously this situation cannot last. Probably there will be a bigger feeding frenzy as other contractors swoop down like vultures to feed off the Carillion carcass. This is not ideal. As I suggested, it would have been nice if the government had given smaller businesses a chance; but this is way better than a bailout. This affair is also going to throw the entire PFI ethos into question. Jeremy Corbyn asked Theresa May some searching questions about the whole business at Prime Minister's Question Time. He did not mention the fact that PFI is the brainchild of a Labour government, not the Tories. The government has established a "Carillion task force" which includes representatives of business, construction experts, trade unions, financial services and the state. We will have to wait until they've been through a tedious and lengthy process of umm-ing and ahh-ing before they eventually publish a coherent report. Source: The best analysis of the Carillion collapse has come from Ian R Crane who explains how people were lured into buying Carillion stock options that were not as lucrative as they pretended. In this way the entire operation was a bubble and it has now burst and left many people who trusted advisers with their investment totally penniless. See:

Sunday, 14 January 2018

Carillion Collapse

Carillion plc was founded in 1999 at just the right time. It rode the grand ascending surf of PFI- private finance initiatives brought in by Tony Blair's Labour government as they tried to become an extremist caricature of the Conservatives they had defeated in the election two years earlier. Carillion is primarily a construction and civil engineering contractor, but it also provides management for the facilities it builds. It has thrown up many grand edifices all over the world, from a motor racing circuit in Thailand to a hotel in Abu Dhabi. In the 2000's it was brought in by the UK government to build the newest and most ambitious phase of my old hospital, the John Radcliffe Hospital in Oxford, see: As part of the deal, it took over management of the entire Facilities department; domestics, catering and, of course, portering. None of us were ever employed directly by Carillion; we retained our NHS positions, but we were completely under their control. In the background links I provide details of that period of my portering life and give you an idea about what it was like.

Last year it was revealed that all was not well at the mill. The share price of Carillion plc plunged in a steady spiraling slope broken by two catastrophic dips. They started the New Year by dropping a 1.5 billion pound debt bomb. Some financial commentators claim that the firm has simply overstretched itself, gambling on too many difficult licenses that turned out not to be profitable. It has also suffered delayed payments from some of its jobs in the Middle East. It also has a 600 million pound pension deficit that will not affect me personally, luckily; but it will cause problems for many of its twenty thousand employees, mostly skilled men in the building trades. The big fear comes from the fact that Carillion is now so integrated into public services that those very services would be threatened by the company's bankruptcy. As I said the other day, it's a network, see: The NHS, prisons, railways, the armed forces, highway maintenance and education could all be seriously hampered by the shutting down of Carillion. It might also delay the construction of the high speed railway "HS2"; a good job I say, see: This quandary could be solved by a bailout. Sir Vince Cable, Liberal Democrat leader, has urged the government not to bail out Carillion. What he says is the perfect illustration of the stupidity of PFI. It is essentially the privatization of profits together with the nationalization of losses. Source:, and: I recommend that the company be allowed to tank, and then the government can repossess its assets as collateral. This would include everything it has built at the John Radcliffe, all eight hundred million pounds worth of the neurological centre, the new eye hospital, the children's hospital and everything else. It should be the perfect opportunity to relieve itself of the ridiculous loan system by which Carillion built the place and then the government bought it back at 33% APR, a rate of interest that would be... somewhat uncompetitive... if it were offered by any high street bank. The government could easily provide its own management, indeed there is a massive untapped source of skill and experience within the portering community itself. Some of the senior porters could act up for a while until the situation settles down and permanent posts can be filled. Maybe this will make the government think again about the supposed wisdom of the PFI system. If they absolutely insist on privatization as a deep-seated cultural and emotional principle, privatization for privatization's sake alone; then why not let the services set up their own small outfits and bid for the contract themselves? This was an idea I explored when I was a porter, see:

Friday, 12 January 2018

Branson's NHS Billion

When I was a hospital porter we used to joke about "Virgin Health". It was an exaggeration at the time; we never imagined that truth would eventually catch up with our jest. Richard Branson's Virgin Care company has just earned the biggest haul of privatization licenses ever seen in the NHS. Over four hundred separate contracts now belong to Branson's empire. Source: It's interesting that the article uses the word "dysfunctional" to describe the privatization procurement process. Why does it not simply say "corrupt"? The theory behind NHS privatization and the reality of its effects are separated by so vast a gulf that it makes me despair that so few people are talking about it. It was a strategy just beginning when I joined the NHS. A year into my service the porters were contracted out to a company called ISS Mediclean, an outfit that was already running the domestics there. There was a tendering period where several firms put in bids to run the portering service and the privatization committee "gave it their consideration." During this period we noticed that the Facilities director seemed to be spending a lot of his time in the company of the local Mediclean manager. They took their lunch breaks together etc. We knew then what was really going on and when Mediclean won the porters contract we were not surprised. We later found out that the Facilities manager was given a "finders fee" by somebody behind the scenes, a shareholder we imagine; which is just a euphemism for "bribe" as far as I'm concerned. Of course it's all legal and above board... which is what is so frightening about it. Through the decade Mediclean ran the porters, quality of service fell through the floor. I watched it happen; unable to do anything to stop it. We've never completely recovered from that Dark Age. No matter how many bad reports the monitoring officer, a former senior porter, submitted to the trust management nothing was done. Under Blair's Labour government privatisation accelerated past the point of no return and now the entire NHS is basically nothing more than a network of these tin pot contractors supported by another network of robotic and amoral bureaucrats. The only competition in the NHS is who is willing to grease the backhanded palm of the correct regulator the quickest with the crispest unmarked banknotes. Sorry to start 2018 with news that is so pessimistic and black pilling, but these are merely the facts. RIP the National Health Service.