Carillion and Public Sector Outsourcing

Liz Twist Excerpts

Wednesday 24th January 2018 Commons Chamber

[Mr Lidington]

May I come to discussing the particular hospital that the right hon. Gentleman cited?

We are working with the official receiver to ensure that Carillion construction staff working on the Royal Liverpool Hospital, the Midland Metropolitan Hospital and the Southmead Hospital in Bristol continue to be paid. This allows for a more orderly timeframe for the discussions to take place between the private finance initiative contractor and the lenders to ensure that new contractors can replace Carillion and that the work can resume at the earliest possible date.

I say to the right hon. Gentleman that we know that we have a lot of work still to do. We have, for example, to find alternative suppliers both for those hospital contracts and for other contracts, but I regard the hospital contracts as a particular priority. The exact structure of those contracts and the extent to which they are nearing completion obviously varies depending on which hospital contract one looks at. The precise solution will differ from Liverpool to Bristol to the west midlands. I assure him that we regard getting on with that job as a very high priority indeed.

[Liz Twist (Blaydon) (Lab)]

The Minister is talking about health contracts. Some years ago, I was involved in negotiating one of those contracts with Carillion at South Tees Hospital. As I understand it, those contracts have now been transferred and sold to Serco by Carillion. Serco has seen its own profit warnings raised. What steps will he take to ensure that we do not find ourselves in a similar position in future? These are staff providing vital health services that are an integral part of the hospital, and it is really important that we take preventive steps.

[Mr Lidington]

It is the statutory responsibility of the official receiver to ensure that contracts previously held by Carillion are transferred as quickly and in as orderly a fashion as possible to alternative contractors. In respect of the public service contracts, the Government are ensuring that payments are made for the continued delivery of those services while that process continues. It would be irresponsible of a Minister to be drawn into speculating about the situation of any named company, but I just say that the company that the hon. Lady mentioned has not issued any profit warnings. I am sure that the official receiver will be going about his job in a responsible fashion.

There have been questions, not least from the hon. Member for Hemsworth, as to why we continued to award contracts to Carillion even after the first profit warning on 10 July last year. It is important to put it on the record again how Government procurement works. When Government advertise opportunities, bidders go through a formal process, which may involve negotiations, and then submit a bid. These bids are looked at on a basis of equality between competing bidders. They are scored formally for quality and price against a published set of evaluation criteria, and the contract is then awarded to the highest-scoring bid. It would be a major legal risk for the Government, having published criteria, then to seek to exclude any bidder from a contracting process on the basis of other, somewhat arbitrary, criteria.