To respond to Carillion’s collapse, we need a dedicated task force and a new debate on outsourcing

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Published date
16 Jan 2018
The collapse of construction and outsourcing giant Carillion poses a very real threat to the jobs, pensions and livelihoods of thousands of workers in construction and support services across the public and private sector.

Not only those directly employed by the company, but thousands more in their supply chains are now facing a very uncertain future as the insolvency proceeds. Indeed, the majority of those employed in Carillion-managed construction projects will not be directly employed by Carillion. So managing the impact of the crisis on supply chains involving literally thousands of employers is essential.

As trade unions, affected workers and the services they provide are our first priority. And is is right that the government quickly announced a commitment to continue to deliver all public services following the insolvency.

Workers, however, remain anxious and it’s critical that the government and receivers meet with unions representing workers affected by Carillion’s collapse as matter of urgency and come up with a plan that protects jobs and pensions across all sectors.

The scale of the crisis means that we need a far more proactive approach than the previous government took in response to the collapse of CityLink in 2014, or Jarvis in 2010. Back then, they did little more than pointing laid-off workers in the direction of the local job centre.

In this case, given the potential impact on jobs, supply chains and services, the government should immediately set up a national task force. It must:

  • involve unions to give Carillion workers certainty on their jobs, pay and pensions
  • bring Carillion’s public-sector contracts back in-house to ensure consistent delivery
  • support transfer of private sector contracts to alternative providers with jobs, pay and pensions protected
  • fund a training and financial support package for at-risk workers and apprentices

Mayor Andy Street’s announcement that he will convene a West Midlands regional taskforce to support suppliers and sub-contractors is a smart move. But the hollowing out of regional layers of government in 2010 means that many parts of the country lack the capacity to pull together similar responses. The government needs to address that gap.

A new debate on outsourcing

Along with short-term emergency measures, we need to look at the longer-term implications – part of which must be the opening up of a debate about the future of public service outsourcing.

The way that Carillion has collapsed begs questions about the systemic failures of our broken outsourcing model.

We’ve got a £90bn a year market in outsourced public services that’s concentrated in the hands of a small group of over-stretched, too big to fail contractors. They’re able to game the system through lowest cost competition while delivering few of the promised benefits of value for money, service improvement, innovation, customer satisfaction or risk transfer.

Carillion is the latest in a succession of failures by private companies running public services, which are costing us dear:

The government have argued that privatisation shifts the risk of major projects to the private sector, Carillion going bust shows the risk remains with the state and the taxpayer.

So we need a new debate on the pros and cons of outsourcing, one based on evidence, not dogma.

We need to review our procurement and commissioning practice, ensuring greater use of social, environmental and economic criteria that protects against low cost, low value providers. And we’re arguing for the national task force to perform a risk assessment on other large outsourcing firms to avoid another crisis.

The situation is bad enough already. Neither workers nor taxpayers can afford to be lumbered with another Carillion somewhere down the line.

Image: Christopher Furlong / Getty Images