Carillion and Public Sector Outsourcing

Patrick Grady Excerpts

Wednesday 24th January 2018 Commons Chamber

[Patrick Grady (Glasgow North) (SNP)]

My hon. Friend makes some important points. Do not the Government need to send a strong signal to public sector bodies that are issuing contracts that best value does not necessarily or always mean the cheapest? The problem is that companies undercut each other because they think that is how to get the contract, and the local authority thinks it has to take the cheapest, rather than the best value that will deliver the best quality service.

[Kirsty Blackman]

I agree. As a local authority councillor, I worked under the best value regime looking at contracts and tenders. I judged them, not just on the best price, but on best value and the quality of service provided, and whether the companies would be able to deliver what they said they would when they tendered for a contract. Something has gone wrong in the system. I do not know if that is because of Tory austerity, which has resulted in a squeeze on contracts in the public sector and a drive to ensure that contracts are awarded to the cheapest bids, rather than those that provide best value. Given the collapse of Carillion, the Government need to look carefully at the reasons behind awarding all those contracts to ensure that this can never happen again.

I see you shoogling in your seat, Madam Deputy Speaker. I will just take another minute. The Public Accounts Committee warned of the risks of contractors paid from the public purse becoming too big to fail; unfortunately, the Government did not heed the warning and continued to award the contracts. I think—I hope—the Minister would agree with me that it is disgraceful that the contracts were awarded and Carillion continued to line the pockets of its shareholders despite not being in a position to fulfil the contracts. Clearly there are major structural issues with the awarding of contracts. I hope that this is the beginning of the UK Government looking seriously at the matter and making proper changes to ensure that these events can never happen again.