Carillion seen through different eyes

John McTernan has written a typically forthright (strident), piece in the Guardian arguing that the Carillion collapse is the ultimate proof of the virtues of outsourcing government services to private companies.
McTernan was Tony Blair’s director of political operations 2005-2007. He has been loud and clear about his opposition to Jeremny Corbyn and has clearly not budged a centimetre in his belief in the Blairite embrace of private solutions to public problems. He says of the Carillion collapse

… we should always be grateful that private companies have delivered better public service for less money.
Carillion, he says, has:

… delivered vital public services – and delivered them well. Notice that in the fallout over the collapse of Carillion, few questioned the quality of what it has been doing in the public realm. From the NHS to HS2 the company’s record of delivery is positive;

… taken risk out of the public sector and absorbed it themselves. It is one of the oldest criticisms of public private partnerships that … profits … are privatised, while risk remains nationalised. In the case of Carillion we can see that is utterly and demonstrably false. How? In the simplest possible way – the company has gone bust.

And consequently

… we have had a bargain – we have paid substantially less for services than they cost to deliver. How can we be sure about that? Again, it is the collapse that is the proof. If the directors had driven exploitative bargains with the public sector, they would be driving round in Maseratis rather than polishing their CVs and wondering how to explain their catastrophic failure to future prospective employers.

On the other hand, Lord Adonis, who is no slouch when it comes to involving the private sector in public projects, now has doubts. In a video discussion on the Guardian website he starts out by saying that the government has behaved “improperly” over the East Coast rail franchise.

… by bailing out Stage Coach and Virgin to the tune of up to £2bn and, in doing so, potentially opening up the tax payer to billions in payments to private rail companies, all because Chris Grayling was not prepared to threaten, or indeed to set up, a public company, which is what I did when I was Transport Secretary faced with exactly the same situation …

… Carillion … was clearly a very badly mismanaged company … the bonus culture … and the culture of bidding aggressively at all costs and a ponzi-type arrangement …. All of that was a failure of the private sector. … There is an issue of why Chris Grayling was awarding contracts to the company even after it had been shown that it was in dire straights. … it was to bale out Carillion in the sense that it continued to give it contracts to stabilise it …

… it’s going to have massive knock-on effects. We’re dealing with thousands of subcontractors to Carillion many of which are small and medium-sized business that will be at death’s door as a result of this.

… There has been a culture that has developed … under both parties … of contracting out as a first recourse rather than a last recourse. … As public budgets have been constrained it has always looked as if you could get a bigger bang for your buck, and get investment more quickly, if you went for PFI …

When asked “Do you think that New Labour was guilty of tipping too far into the ideology of private provision” Lord Adonis says

Yes I do. … We were too excited by the prospect that new shiny private sector companies with names like Richard Branson on them would deliver a better service just because they were Richard Branson and were in the private sector. I’ve got over that.

Guardian Economics Editor Larry Elliot has a piece on Carillion in which he says that “Carillion’s collapse was capitalism in action. Profits are the reward for taking risks, and sometimes the risks materialise. … In a free-market system, it’s that simple.”

Except that it isn’t quite that simple in this case, because much of Carillion’s work was for the government: building roads and hospitals, running prisons, providing school meals. Whitehall didn’t want the company to go bust, so bunged it a few new contracts when it was already in trouble in the hope that something would turn up.

Elliot goes on to discuss the general problem of private/public projects. He says

There are lessons to be learned from Carillion’s collapse, but the idea that SMEs should be building billion-pound hospitals is not one of them. Lesson one is that governments can have austerity or they can have PFI, but not both together.

Lesson two is that the state is not well equipped to manage big infrastructure projects. There are plenty of examples – the abandonment of the NHS IT project at a cost of £12bn, for example – of official incompetence. Whitehall’s handling of Carillion has left a lot to be desired. No matter what Labour says, the private sector will inevitably have a big role in the delivery of major projects. Even under a Corbyn-led government, there would inevitably be a role for it.

If Elliot is right it follows that there are no simple “ideologically pure” solutions. Hard thinking is required and he makes some proposals for that. These different reactions provide plenty of thought to anyone interested in exactly what Labour’s approach to private/public projects should be and I recommend that anyone who has not read/viewed them does so.

Rather more radical than Elliot is the approach of the We Own It campaign. Their website has a large amount of information about privatisation and publicly owned alternatives. This material clearly needs to go into the mix for an informed debate about how best to respond to the Carillion Collapse.

Hounslow Council. It is clear that the Council read the runes and started the process of ending Carillion involvement (which was started by the previous Tory/ICG administration) before the Company collapsed. It might be argued that it should have started the process earlier given that load warning signs were clear from April/June 2017 but that would require some understanding of what it did and when. What we know from its statement is that it was actively engaged in backing out of Carillion contracts by last November and the process had obviously started before that. It would be interesting, of course if anyone can provide more detail on this but let’s not judge without that detail.


Iron, like a lion in Syon? More like the lion sleeps tonight


Happier days: Brendon Walsh and Steve Curran survey all they command

By lil’ red mole

Council leader Steve Curran and allies Katherine Dunne and Theo Dennison cleared the trigger ballot for councillor selection on 6 December.  That means they automatically go through to represent Labour in Syon ward in the May 2018 council elections. Steve received 21 of the 35 votes from Syon ward Labour Party members at the meeting, with Katherine and Theo garnering slightly more.

Continue reading “Iron, like a lion in Syon? More like the lion sleeps tonight”

Labour right warns of crisis as party lead soars

Momentum Hounslow responds to Roy Hattersley’s red baiting in the Observer


What failure looks like: Hattersley and Kinnock

By the lil’ red mole

Just as pollsters put Labour eight points ahead, Roy  Hattersley announces in the pages of the Observer that the party is in its deepest crisis ever.

For those too young to remember Mr Hattersley, he is a veteran Labour right winger and was deputy to Neil Kinnock. So, to be fair, he knows a thing or two about losing elections.

Continue reading “Labour right warns of crisis as party lead soars”

Labour must reject ‘business-as-usual’ housing policy after Grenfell

New graphic for Angie

By Eileen Short

Defend Council Housing – Homes for All

The struggle for a safe secure home, dominates life today. A desperate need for homes that meet need, not just make money, means growing support for radical new housing policies.

Jeremy Corbyn’s commitment to build new council housing was a major break in the Tory mould, that helped Labour win credibility and votes in the June 2017 election.

Corbyn’s own ten-point pre- election plan included a “secure homes guarantee”: to build one million new homes in five years, at least half of them council homes, along with rent controls and secure tenancies for private renters. Corbyn’s commitments inspired Labour supporters, and is what millions expect from Corbyn’s Labour. Continue reading “Labour must reject ‘business-as-usual’ housing policy after Grenfell”

An open letter to Ruth Cadbury

Dear Ruth,

I think that your letter on an “organised plan by a particular group to “take over control” of our constituency party” was unhelpful.

When dealing with contentious issues we all have to exercise the utmost care to avoid descending in to vague allusions to shadowy enemies with outrageous views. It is therefore to be regretted that you did not see fit to give the source of your information. Who sent the email to which you refer? What was its purpose? For whom was it intended? Without such information we are just dealing with political noise. Can you not agree that this is not the right way to debate political differences? Continue reading “An open letter to Ruth Cadbury”

Responding to Grenfell

Housing has been a critical issue both locally and nationally for decades, but the dire implications of government policies were brought sharply and tragically into focus after the recent inferno in Grenfell Tower. In Hounslow, we feel that it’s time to launch a housing group to work to improve housing conditions in the borough and to apply pressure on the local authorities. We hope that people will be able to get involved and contribute to making this a success and we would like to encourage everyone who is able to lend a hand. Read more…

Labour MPs put internal divisions on public display again

The anti-Corbyn camp told us for two years that electoral advance was impossible under Corbyn’s leadership. The majority of Labour MPs were so sure of it that the opened party divisions to full public view with a vote of no confidence against the leader which 75% of Labour MPs supported (including Ruth Cadbury and Seema Malhotra). And yet Labour rise in the polls was the biggest since 1945. Labour had experienced dramatic decline from the moment when Tony Blair became prime minister – the data is undeniable. It reached its lowest point of public support in the election of 2010 (led by Gordon Brown). Five years later Labour lifted itself marginally from a historic low point by just 2% (led by Ed Miliband) but clearly there was no sea change. Continue reading “Labour MPs put internal divisions on public display again”