Carillion and Public Sector Outsourcing

Ian C. Lucas Excerpts

Wednesday 24th January 2018 Commons Chamber

[Ian C. Lucas (Wrexham) (Lab)]

It is a real pleasure to see you back in your rightful place, Mr Deputy Speaker.

The reaction of many of us to the demise of Carillion was, “Here we go again!” We have seen once more the very heavy cost of privatising profit and socialising risk. The buck stops with the British taxpayer, who will once more have to bear the cost of the failure of our current economic model. The Carillion crisis has again shown the failure of the model established in the 1980s—the privatisation of the delivery of public services.

Far from making the delivery of public services cheaper and more efficient, we instead see businesses building monopolies on the back of public investment, eliminating competitors on the way and using precious public money to maximise the return to senior executives and shareholders, often on the back of huge borrowing. The result is, in the case of Carillion, that when the banks say enough is enough, the public obligation to deliver services reverts to the taxpayer and the British taxpayer has to bail out the organisation.

It is not just Labour MPs who are fed up with this situation. Conservative MPs should listen to the fact—according to the Legatum Institute, for goodness’ sake—that 83% of the British people favour the renationalisation of water services and 77% favour the renationalisation of energy services. They know they are being ripped off, and even the Conservatives are now talking about energy price caps. It is becoming increasingly clear that there is a developing consensus that the 1980s model of privatising the delivery of public services is not working and needs to be changed.

As the Minister with responsibility for construction in 2009, I remember construction businesses telling me that they had overcharged by about a third on public sector projects. The largest construction businesses were very often shells, simply managing contractors in a way that some would describe as parasitic. They held on to public money for as long as possible before finally paying it over to the small businesses actually doing the work, and the executives creamed off obscene levels of salaries and bonuses from the contract. Obligations to pension funds were not respected or looked after, and all of that was certified by an ever-diminishing group of the same old accountancy firms, which do not do their job properly and do not tell us when businesses are about to go bust.

The public have had enough of this. The Labour party has listened to the public, and it is about time the Government did so too. If they do not, they should get out and we can have a Government who do.