What lessons can we learn from Carillion – and what changes do we need to make?
The report recommends corporate governance reforms and an improved commissioning process. The TUC proposes a new commissioning model based on public provision of public services, except in cases where it is clearly shown that outsourcing is in the public interest.
- Restore public interests to the heart of public services. All commissioning decisions should be based on a public interest test with clear criteria. In-house provision should be the default, unless there is a demonstrable public interest case for outsourcing.
- Provide transparency for who runs our services. The government should publish comprehensive information on significant contracts across the public sector, including information on value, length and performance.
- Reform directors’ duties to promote long-term success. Directors should be required to promote the long-term success of the company as their primary aim, while having regard to the interests of shareholders, workers, customers and service-users, the local community and other stakeholders.
- Strengthen UK law to better protect workers. Companies must have stronger duties in insolvency situations. This should include early and meaningful consultation with trade unions, protection of pay and conditions for staff transferred to a new employer, and recovery of unpaid wages and holiday pay.
In the wake of Carillion going into compulsory liquidation this report sets out the reforms needed to protect public services and improve quality. This report identifies the problems that led to Carillion’s collapse and proposes reforms to improve the quality, value and sustainability of public services.
It highlights the systemic failures of an outsourcing model that prioritises low cost over quality, and a corporate governance model that prioritises shareholder interests. These combine to encourage firms to further outsource risk, leading to a complex web of subcontractors with little transparency or clarity for where responsibility lies.