Interserve has contracts across the public sector, from cleaning to offender management and welfare. Today shareholders voted 60% to 40% against accepting a rescue package in the form of a debt for equity swap.
The next step is likely to be a so called “pre-packed administration”. That means that all of the shares in the company are wiped out, but it will continue to operate while its assets are sold off.
It is imperative that government meet urgently with unions to discuss concrete measures that can be put in place to safeguard the 45,000 UK employees whose futures are now put at risk; as well as the thousands more subcontractors who have been left exposed with little hope of repayment.
Interserve’s largest shareholder the Hedge Fund, Coltrane Asset Management might attempt to buy up some of the assets, as the administrator sells them off.
We face the risk that vital public services: probation, social care and welfare could be taken over by a US Hedge Fund, who is likely to be more concerned about the bottom line than service users and staff.
In the future lessons must be learned from this.
Last year we called for more robust oversight of public sector outsourcing. Interserve is just another example of why this is needed. The company was still winning government contracts as recently as December 2018, when it was already in talks to attempt to prevent collapse.
We need an outsourcing Domesday Book – a record of all the outsourced public sector contracts. And we need a public body with powers to regulate them, one with real teeth.
In the meantime, we called for a complete moratorium on further outsourcing. Today’s events only underline how essential that need is.
But in the long run, a more serious conversation needs to be had about the value of publicly run, democratically accountable public services. The need for a public sector that isn’t carved up for private profit, a public sector that is run for people not private profit.