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19th February 2018

Carillion’s dirty papers

Parliament voted to release the government’s risk assessments of Carillion… and they are devastating
Carillion’s dirty papers
Terry Robinson

The recently published documents detailing the financial history of the construction firm Carillion are a stark reminder of the danger of political hebetude. The evidence is conclusively damning; Carillion was teetering on the edge of financial disaster, but politicians and regulatory bodies blindly continued to follow the well-trodden path. They were awarded public service contracts rather than upset a precarious status quo.

Carillion had one of the largest pension schemes in the FTSE top 350 companies, and were responsible for countless government projects, including part of the HS2 construction, the provision of meals in schools and hospitals, and the maintenance 50 prisons. Not to mention the number of other private ventures they were involved in, including the development of Manchester University’s Fallowfield Campus. Their collapse has put thousands of jobs and retirement plans in the lurch, but in the bubble of neo-liberal government, private finance initiatives and outsourcing continue to be the frontmen of a risk-free economy.

Now that this illusion is crumbling, predictably everyone is looking for someone to blame: some individual to take the wrap for this mess so that it was a failure of one cog in an otherwise perfect system rather than an inevitable breakdown of a rusty engine. MPs have accused the Carillion directors of being “delusional” and “asleep at the wheel”, accusations that are not to be denied, but whilst their behaviour was irresponsible, it is beyond rich for those who continued to put their faith in this confused company to criticise them for lethargy.

Meanwhile, Carillion has blamed delayed payments from Qatari contracts as contributing to their financial strife — claims which have been strongly refuted by those they have been levied against. This leaves a slightly sour taste in the mouth when the supposedly strangled company continued to pay their Chief Executive a £660,000 salary, leaving the pensions of the most junior employees in the danger zone.

Carillion’s behaviour is strongly reminiscent of a teenager attempting to budget their first pay check in the face of a weekend home alone, and it’s an established fact that shifting the blame for an illicit house party doesn’t tend to sit well with the homeowners.

The Tories tried to dodge the blame from the beginning, originally protesting the release of the Carillion papers, feigning complete innocence as just one of many Carillion customers. And it is no wonder that they didn’t want the evidence in public hands, their negligence is obvious. For instance, the HS2 contracts were awarded to Carillion without so much as a face-to-face meeting between representatives from the company and anyone from government. It was taken for granted that the Carillion mammoth would keep lumbering on.

When people’s futures are at risk, this blame game is childish, and so beyond this point it’s almost laughable. Carillion messed up, companies do all the time, but that they remained even in consideration for government contracts is shocking and betrays the true lack of care for ordinary jobs within high politics.

It displays the complete rejection of accountability that persists in this government. They would much rather hide their dodgy behaviour behind the public’s ignorance no matter the consequences for the majority population who may have lost their pensions, or whose local public services will now be struggling to continue to operate. Whilst they are busy battling with semantics, they open the window for the public to see just how unconcerned the right is with reality.

There’s also potentially going to be damage done to a number of smaller business and subcontractors which interacted with Carillion, as well as the individuals they directly employed. The process of contracting out gives giant companies the opportunity of accepting responsibility for a massive variety projects, most of which they have no real expertise for. So, they outsource them to smaller firms and make a tidy profit along the way.

These businesses have now been left in the lurch, because they put their trust in the sheer titanic-like (all connotations intended) size and scale of Carillion. Big business, big revenue streams, and big men in big office blocks have become the trusted stalwarts of our society.

This is at the heart of the problem, privatisation is intended to mitigate risk by putting it in the laps of private companies which can cope with it. The big secret is though, that despite all the capitalist bravado about entrepreneurship and business bravery, nobody actually wants to accept this uncertainty. The leap of faith is all very starry-eyed on paper until it’s your own name on the loan. So, liability gets parcelled up and passed around until it can be left on the doorstep of someone completely unaware of what they’re taking on. In this case, it was the workers whose pensions are floating in the ether of the bailout. Carillion is the cautionary tale of the hubris of an economy with its roots in fairy-tale ideas of big business.

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