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:

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