Tuesday, 16 January 2018

Carillion and the MoJ

It's unfortunate, but the collapse of Carillion has rather thrown us off the TR omnishambles and given the likes of MTCnovo a breathing space until we can refocus on their bullying tactics in London. 

Just one of the staggering aspects to yesterday's outcome is the utter pointlessness of 'audited accounts', especially when the likes of KPMG get the job of clearing up the mess that the other big firm PWC spectacularly failed to spot in the first place. They just rotate positions but I guess that's how capitalism works and as one Tory MP was heard to say yesterday, "if you didn't have failures it would be like having Christianity without the Devil."

Given the MoJ's track record on outsourcing, I guess it's probably a good idea to remind ourselves and take a look at this article by the Institute for Government from last August:-

Outsourcing problems at the Ministry of Justice

The Ministry of Justice (MoJ) can scarcely go a month without a bad news story related to one of its outsourced services. The recent outsourcing of probation services - which the Institute for Government (IfG) and many others warned was rushed and risky - is not going well. Many of the new private providers say they are making big losses, despite the department providing them with some additional cash, and probation inspections are revealing concerns with the majority of outsourced work.

There was uproar when MoJ announced that G4S would be providing electronic monitoring services for offenders, given the company is still under investigation for allegedly overcharging the department for the same services between 2005 and 2013. And this week, The Times published a Ministry of Justice admission that the savings promised when it outsourced maintenance of prison buildings to two companies in 2014 would not be delivered.

There have long been complaints about the quality of the work performed by Carillon and GEO Amey in different regions. And a recently published MoJ report reveals that “historically the costs of maintenance and services were not clearly understood by the business and consequently planning assumptions have not held true. The contract is therefore underfunded and the declared efficiency savings reduced.”

In truth, it’s currently impossible to find out precisely how well contractors delivering government services perform. Prisons and probation as a whole are inspected, which provides a good degree of transparency. But when more specific parts of the services are not inspected – as in the cases of electronic monitoring and prison maintenance – MoJ, like other departments, tell us relatively little about how well private providers are doing.

This is unfair to taxpayers, for whom the debate about marketisation is politically relevant given the differing stances of the main UK parties. But it’s also unfair to providers, as we can’t tell if problems are limited to specific companies or more endemic. If government acted on its promise to open up data on contractors’ costs and performance it would also be easier for us to judge the cause of problems – though basic data will never tell the whole story.

It is likely the 2014 outsourcing initiative didn’t get the time and attention it needed as it coincided with the much larger and more sensitive probation outsourcing. This was at a time when the number of MoJ civil servants had fallen significantly and there were vacancies in the commercial team. The IfG has written widely about the need to prioritise major projects ruthlessly, and outsourcing projects are no exception. Doing multiple outsourcing projects simultaneously can reduce competition as providers will often only have the resources to bid for select projects. And this wasn’t the only outsourcing initiative rushed through to lock in ‘savings’ before the 2015 election.

The backdrop of understaffed and increasingly violent prisons can’t have helped with delivery. I would wager that some of the reasons jobs aren’t being done as quickly as desired include poor communication from prison staff and constraints on prison access – a particular issue when some of the maintenance work is carried out by inmates. We’ve previously recommended the use of scenario and simulation exercises to test how contracts hold up in a range of circumstances, but these exercises rarely happen.

The underestimate of existing costs and the overestimate of savings was likely the result of inadequate data, poor technical skills and insufficient frontline consultation. But this is not just a question of staff skills and processes. Those contracting out services - ministers, officials and contractors - are often prematurely heralded for delivering ‘savings’ before they become real and then are not held accountable when costs escalate in ways that could have been predicted.

Commercial staff also have little incentive to look beyond the immediate costs of the service in question. The outsourcing of court translation services prioritised costs and wasted vast amounts of expensive court time and legal expenses when translators couldn’t be found for critical sessions. Disruption resulting from maintenance failures may be somewhat lower but shouldn’t be underestimated. For example, there are costs in staff time when officers have to escort prisoners to a different block if there is no hot water. Delays in fixing plumbing or ensuring a library is accessible can contribute to a hostile mood and ultimately even violence.

We urgently need better long-term performance management of government commercial staff and project owners to ensure those working on deals think about the long-term. Ministers and staff involved in projects that have gone wrong must be brought back to face Select Committee scrutiny.

But the most critical short-term steps to improve performance lies in better contract management. If providers promised to meet certain standards and are failing to, there needs to be a mature ongoing dialogue about the precise reasons and appropriate penalties must be triggered to incentivise improvement. The MoJ also needs to ensure that other departments using these providers are aware of the scale of the problems and the reasons for them – which will help inform future contracting choices.

The long-term solution lies in improving overall commercial capability in Whitehall. Cabinet Secretary Jeremy Heywood has long said that this is one of his top priorities – but now is the time for us to start seeing results. Current plans to improve commercial capability in Whitehall are focused on the right issues. But they will not succeed unless ministers and permanent secretaries recognise the importance of the issue, invest in the resources required to oversee multi-million pound contracts effectively and involve departmental commercial experts in key outsourcing decisions at an earlier stage.


A reader has handily reminded us of this:- Feedback published by New Philanthropy on the TR competitive tendering procedure.

Problems with the TR competition

The round table participants identified four broad criticisms of the TR competition process:

- They found the process very chaotic and confused, with questions unresolved, deadlines and key aspects changing right up to the later stages of the competition. The final details of both the PCG and the payment mechanism were only available at a late stage in the process.

- The process was felt to be much more complex than it needed to be. Bidders needed to get to grips with vast amounts of documentation and detail.

- The MOJ did not appear to have the capacity to run or support an effective tendering process. Bidders who passed the PQQ stage received around four days of support from officials, but our participants estimated they needed three or four times that to resolve all issues and questions they had. The calibre and experience of officials supporting the bidders was described as ‘inconsistent’; some did not seem to understand their own processes and participants cited examples of contradictory information being given by different officials.

- The specification offered limited scope to describe the quality of bidders’ proposed approaches. More generally, our participants concluded that considerations around quality, vision, and innovation were largely irrelevant to the final decision of whom to commission."


As this from the Independent demonstrates, the fallout is going to have widespread ramifications and may prove a watershed moment for further privatisations. It also has Chris Grayling's fingerprints all over it:-

Carillion bosses face inquiry after protecting ‘exorbitant’ £4m bonuses ahead of collapse

Carillion bosses face an investigation into a “shameful” bid to protect their bonuses before the firm went bust, with the company’s collapse now threatening to turn into a major corporate scandal. The Government warned directors of the firm, which handled hundreds of public contracts, that they would be hit with “severe penalties” if found guilty of misconduct in securing some £4m in handouts last year.

The bonuses were branded “exorbitant” in the Commons – one former cabinet minister likened the situation to a “British Enron” – while Labour leader Jeremy Corbyn said the collapse is a “watershed moment” for privatisation.

As the fallout spread, ministers were adamant fault lay squarely with the firm’s management and said taxpayers would avoid significant extra costs, despite stepping in to ensure Carillion-provided public services continued. But a slew of inquiries are now expected to pick through not only Carillion’s downfall, but the actions of ministers who handed the firm 450 contracts in recent years.

After Carillion failed, having racked up debts and liabilities worth £1.5bn, MPs heard how bosses tweaked rules in the firm’s 2016 annual report to make it harder for investors to clawback bonuses if the company hit trouble. Previously the firm had the right to reduce bonuses not yet paid, but after the 2016 report so-called “clawback” provisions could only be applied if financial results “have been misstated” or “the participant is guilty of gross misconduct”. A few months after the alteration an accounting crisis wiped £600m off the firm’s share value.

Labour MP Emma Reynolds, in whose constituency 400 of the 20,000 at-risk UK jobs are located, branded the bonuses “exorbitant” while workers’ pensions were at risk and creditors are set to get nothing.

Cabinet Office Minister David Lidington told the Commons in response that the official receiver in the case would launch an investigation into the circumstances around the firm’s collapse, and went on: “I think it would be wrong of me from the dispatch box to pre-empt the inquiry … into the conduct of both present and previous members of the board of directors. But I can say ... that the official receiver has not only the power to investigate, he has the power to impose severe penalties.”

His Labour counterpart Jon Trickett said: “It is shameful that as Carillion went from crisis to crisis, they were more concerned about protecting their big bosses rather than workers or our public services.”

The Institute of Directors (IoD) also waded in with a stinging rebuke to Carillion’s top executives for what it called a lack of “effective governance”. 
Head of Corporate Governance at the IoD, Roger Barker, said: “There are some worrying signs. The relaxation of clawback conditions for executive bonuses in 2016 appears in retrospect to be highly inappropriate.”

The firm was involved in providing school dinners and cleaning services to almost 900 schools; delivering maintenance and facility management services to hospitals, including 200 operating theatres, covering almost 12,000 beds and catering for 19,000 meals a day; construction work on rail projects including HS2 and Crossrail; maintaining 50,000 Army base homes; £200m of prison contracts and other major construction projects.

The firm’s share price has plunged more than 70 per cent in the past six months after making a string of profit warnings and breaching its financial covenants. But Downing Street accepted that eight contracts had been signed since a July 2017 profit warning, including a deal last Monday not yet signed with Leeds City Council to provide a new orbital road.

Of the others, two were deals with the Ministry of Defence, two related to HS2 and two were Network Rail contracts with a joint venture attached, plus a further one without, worth £62m.

Mr Lidington said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders and I am disappointed that the company has become insolvent as a result. It is however the failure of a private sector company and it is the company’s shareholders and its lenders who will bear the brunt of the losses: taxpayers should not and will not bail out a private sector company for private sector losses or allow rewards for failure.”

He said the taxpayer would step in to ensure workers providing public services were paid and to indemnify the official receiver, but officials insisted it would not mean major extra costs beyond what the Government would have paid Carillion under normal circumstances.

But as well as the official receiver’s probe, the Commons Public Administration Committee announced it would launch an inquiry into how the Government manages the risks of outsourcing.

One area of inquiry will likely include a decision to move a Government representative tasked with managing the relationship between Carillion and the public sector to another project, around the time the firm issued a profit warning last summer.

Ex-Labour cabinet minister Lord Adonis said the situation had “shades of a British Enron”, adding on Twitter that it involved “wild overbidding, fast-and-loose & grossly overpaid management [and] taxpayers taken for a ride”.

The Transport Committee will also grill Secretary of State Chris Grayling next week over contracts he approved before considering a wider inquiry, while chair of the Pensions Committee Frank Field MP said the Government had failed to heed warnings about Carillion.

The Labour MP said: “We called over a year ago for the pensions regulator to have mandatory clearance powers for corporate activities like these that put pension schemes at risk and powers to impose truly deterrent fines that would focus boardroom minds. If Government had acted then, the brakes might have been put on Carillion’s massive ramping up of debt and it never would have fallen into this sorry crisis.”

Britain’s corporate governance watchdog, the Financial Reporting Council, revealed they had been “actively” watching Carillion. A spokesman underlined the body’s powers to investigate, adding: “[We] will make a further statement on this matter shortly.”


  1. It's not just Carillion is it? Whilst this is a disaster and I am sorry for all those concerned - service users, workers, supply lines etc, what I want to know is what will the government do about the process of privatisation full stop. Who monitors the performance of these private companies. Does anyone remember the process of contract compliance introduced by Labour controlled local authorities in the 80s? It worked brilliantly then. We need it now!

    1. Hurrah! I can quote my favourite man, Selous, yet again:

      "Contract Management Teams are embedded in each CRC, closely monitoring how all monies are used and robust processes are in place to ensure all expenditure is correctly spent.”

      So that's alright then. With such robust oversight MTCNovo & the rest of the pirate sector can't possibly do anything wrong & get away with it - can they?

    2. The Carillion collapse is huge, and will have a domino effect globally for some time to come.
      It's devastating for thousands of employees who's rinsed their credit cards and bank accounts to pay for Christmas and are expecting their first pay cheque of the year at the end of the month.
      But I would argue that it's even bigger then what we saw being discussed on the TV all day yesterday, and the government know it.
      It's considered distasterous enough to hold a COBRA meeting last night.
      It's not just the big departments of government that have contracts with Carillion, it should be remembered that many local councils also have contracts Carillion also. Birmingham for example use Carillion to manage their Christmas light displays.
      The collapse of Carillion saw all the other big outsourcing companies making gains on the stock market yesterday. With Carillion gone compition is reduced, and the likelihood of G4s, Interserve, Serco etc getting outsourced contracts has increased.
      There must be investigations, and serious ones too.
      There should also be an investigation into Graylings activities. He's already been summoned to the Public Accounts Committee over Virgin and Stagecoach, and questions were raised yesterday about why he gave Carillion huge contracts knowing they had just issued their 3rd profit warning, and announced they were about to default on their debts.
      Grayling was well aware of Carillions woes, and far from trying to assist them, he took the opportunity to exploit the situation.
      Carillion needed contracts to convince their lenders there was money in the pipeline. Grayling knew they'd agree to any terms just so long as they could get a contract of any sort to take back to creditors.
      So I'd like to see just what terms and conditions Carillion had to agree to to get the Hs2 contract?
      Grayling just wouldn't have missed the opertuity to exploit them.
      Shitbags like Grayling, in the end, are always found wanting. I hope this time it's his time.


    3. On the contract management teams, Rob Allen, in his submission to the JSC, noted,

      'I understand that the contracts require CRCs to provide suitable office accommodation for MoJ staff who are responsible for monitoring the
      contract. Piecemeal knowledge about the contractual arrangements does not allow
      sufficient scrutiny of their adequacy by Parliament.'

      So not quite as robust as Sealous promised.

    4. You mean my man Selous has misled me all this time?

    5. I am looking forward to our Chris explaining his ideology to the PAC.Never needs evidence,does our Chris.Belief is enough for him.Bless......

    6. I think getafix has hit a nail squarely on the head when he highlights the likely MO of Grayling doing deals. Bully, chancer, spiv - but always with someone else's money.

      JSC & PAC ought to be forensically combing the indecently rushed CRC contracts for his trademark hidden clauses which were probably never formally approved, just added 'on instinct', e.g. the termination penalties to effectively prevent the contracts being undone should the election have had a different outcome.

    7. The claim of being misled on TR contracts has already been called.
      It needs to be picked up and examined.
      If the Rt Honerable Minister is not screaming for a public apology for such an accusation then perhaps there's a bit of truth in it.

  2. Are Amey part of Carillion? A bit like working links is part of Aurelius? We need more transparency about these companies..

    1. Amey are a 'partner' with Carillion providing lots of MoD stuff, not actually part of Carillion. So different to WL/Aurelius.

    2. No they're not part of Carillion.

  3. It's crystal clear that the Carillion bosses were well aware that the firm was going to collapse months before it did. Why else would they change the terms under which bonuses could be clawed back. Covering their backs for when the inevitable collapse occurred

  4. On the one hand government spokesman saying that taxpayers will not pick up the cost of this. On the other hand all privateers who took over CRCs were given additional millions of pounds out of public purse to prop them up. What exactly did they do with this money? I see no evidence of it being spent on staff or service users. I suspect it all went to shareholders. It's our money!

    1. Taxpayers won't pick up the cost?
      It's going to cost best part of three quarters of a billion pounds from taxpayers money to underwrite Carillions pension deficit to start with.
      Haven't a clue how you start to calculate the social costs.
      It will cost the taxpayer plenty.

  5. I don't trust the government with my taxes

  6. I don't know if Carillion will be a watershed, but it will cast a long shadow over the use of the private sector conglomerates delivering public services. We know private companies make excessive use of 'commercial confidentiality' until they have to go begging for bailouts. The bubble that private is best has now been burst and when the CRCs are questioned by the JSC they won't quite have the mystique they previously enjoyed. Maybe the political ground is shifting towards more public sector provision, because it carries less risk to the public finances. Whatever, I don't think it will be business as usual...

    1. Just my personal opinion, but I think some of the others will have already sent their begging letters, pointing out the tight profit margins they operate under, the continual struggle they face to pay creditors, it's challenging times for the outsourcing industry as the sad demise of Carillion demonstrates, we need a few more bob just to make sure we're running a stable ship.
      Thankyou very much Mr. Minister.


  7. Bankrupted Carillion = broken Tory policies of financing public services through privatised dealings. Therefore CRC time to go as the public sector should and will demand its safety and support services back. Which by the way are cheaper better more efficient and effective watch words CRCS use but clearly don't deliver as these get in the way of the wheel barrows of cash they are siphoning out the back door.

    1. Interesting insight into outsourcing here on the BBC.


    2. Carillion: Not alone in hitting problems

      Lightning seems to strike the same place remarkably often in Britain's construction and support services sectors.

      For some, Carillion's demise will seem like a bolt from the blue. But look back 20 years and you find a surprising number of companies which struck similar problems, although not always with fatal consequences.

      Amey, Jarvis, Connaught, Rok, G4S, Balfour Beatty, Serco, Mitie - and many others - have had to own up to accounts that were, to use a euphemism, optimistic. Most lived to fight another day. Carillion did not.

      Talk to executives in the industry and they easily find the common thread. Companies that are built up quickly through acquisitions - as Carillion was from the combination of parts of Tarmac, Wimpey, Mowlem and Alfred McAlpine - have an extra struggle first to understand then to integrate their disparate activities.

      Industry experts spoken to by the BBC also think that Carillion overpaid for its acquisitions, leaving it with less financial fat to fall back on when the going got tough.

      All the companies above were hurt by what turned out to be aggressive accounting.

      When a construction company wins a contract, it cannot be precisely sure that it has bid the correct amount - there are always the vagaries of ground conditions, technical challenges, even weather.

      Bid too keenly and you wipe out your profits. And there is danger in taking profits as you progress - this football stadium, for example, is half-built, so why should my company not book half the estimated profit from the deal this year?

      A more prudent approach might be to wait for the final reckoning, and when the tricky final stages of the construction process have been sorted out. But shareholders and the board want results now, so waiting until the end of the contract might make you quite unpopular.


      That same problem of revenue recognition, and the taking of profits too early, applies also to long-term services contracts.

      When you sign a 10-year-deal to run a prison, do you take all the profits up front? You might, and your auditor, might, in the past, have let you. But the underlying truth is that you will almost certainly lose money in the first few years, and make all the profit - if it comes to that - in the final years of the deal, well after executive team that won the contract have moved on.

      In a recent interview with the BBC, Leo Quinn, the chief executive of the construction and services group Balfour Beatty - brought in to sort out the mess after it had its own Carillion-style series of profit warnings and accounts restatements - said that in the end it all came down to culture.

      If staff were given incentives to achieve sales growth regardless of the long-term consequences, then problems would be stored up through bad acquisitions and contracts bid at the wrong price. As Mr Quinn put it, culture is "what does it take to get me noticed around here?"

      It will be interesting to see what investigators find out about what it took to get noticed at Carillion.

  8. In advance of tomorrow's PAC hearing, some words from the March 2014 PAC hearing (& a link to the full transcript):

    Antonia Romeo: I was going to say that one other lesson to be learned about contract management, of course, is that those who were involved in designing the contracts also have skin in the game when it comes to managing those contracts. When the programme finishes, the person responsible, the programme director who has this commercial experience, will move over and become the director of contract management and rehabilitation services, working within NOMS, for Michael.


    Michael Spurr: The first thing to say is that there will be and we have negotiated with trade unions and others a voluntary redundancy package for use where we have identified surplus staff and it would be available post-June when we have moved to the new arrangements of setting up the CRCs and the NPS, but I anticipate that that will be used primarily for corporate service and support staff; operational staff numbers, I think we will need largely to retain, because the aim is to expand the case load.


    Q175 Chair: The Report also talks about an aggressive timetable, Dame Ursula. How long is the period for getting the contracts in, from invitation to tender? How long has that been?

    Dame Ursula Brennan: From the point of launching the invitation to tender to the point when we expect—

    Q176 Chair: To when you want to sign them off in October. How long is that?

    Dame Ursula Brennan: Between now and—

    Q177 Chair: How long is it? What have you given yourselves between invitation—

    Antonia Romeo: The invitation to tender will close in June this year.

    Chair: That process—

    Antonia Romeo: We have said that we will sign the contracts by the end of the year.

    Q178 Chair: By October?

    Antonia Romeo: By the end of the year.

    Q179 Chair: Has that slipped from October to the end of the year now?

    Antonia Romeo: No, there hasn’t been any slippage. I’m really aware that this is a programme that’s in flight, so if possible, I would prefer to commit to the overall commitment we have given for the programme, which is to roll out PBR by 2015... We plan to sign the contracts before the end of the year.


    And some of the PAC recommendations from 2015:

    * The Ministry is recruiting and training staff who can manage contractors and contracting over the long term. The Ministry maintained that appropriate weight will be placed on assessing the quality of the bids received and the organisations putting them forward. Contracts will be designed to prevent Community Rehabilitation Companies changing ownership without prior discussion with the Ministry and contingency arrangements are being considered to ensure that continuity of service will be maintained during the procurement and after the sale of the Community Rehabilitation Companies. The Ministry also plans to apply the lessons from past PAC reports and ensure that contracts have appropriate penalty clauses up to and including termination for non-performance.

    * The Ministry should set out how it intends to satisfy itself that the proposed payment mechanism is workable. As we recommended in our recent report on contracting out public services, the Ministry must include open book accounting arrangements and ensure that they are used effectively. We would also want the NAO to have full access to contractual information that is relevant to assuring Parliament that value for money is being served in these contracts.

    Lets hope these issues are revisited tomorrow by Meg Hillier & co, including questions as to whatever happened to the many 'report backs' expected to be delivered the PAC.

  9. The MoJ have serious questions to answer about their contracts with Carillion after Sam Gymah told parliament twice last year that Carillion were not performing as they should be with prison maintenance contracts.
    Still paid them millions though.


    1. Telling Parliament the contracts are not working, then doing nothing about it but still paying £10 of millions?
      I really want to be a fly on the wall when that ones being explained.
      Good to see probation enter the debate.

  10. BBC website:-

    The government has ordered a fast-track investigation into directors at the failed construction firm Carillion. The UK's second biggest construction firm went into liquidation on Monday, after running up losses on contracts and struggling with heavy debts.

    The Business Secretary has asked for an investigation by the Official Receiver to be broadened and fast-tracked. The conduct of directors in charge at the time of company's failure and previous directors will be examined.

    "It is important we quickly get the full picture of the events which caused Carillion to enter liquidation," said Business Secretary, Greg Clark, in a statement. Any evidence of misconduct will be taken very seriously," he said.

    The role of Carillion's auditor KPMG will be examined by the Financial Reporting Council. Chief executive Richard Howson stepped down in July of last year after a profit warning. He had been in charge since the end of 2011.

    Keith Cochrane was appointed as interim chief executive. There has been much criticism over the size of Mr Howson's pay award in 2016 which, including bonuses, totalled £1.5m. He is also due to receive a salary until October of the this year. Under his leadership Carillion was hit by cost overruns on big projects, problems with contracts in the Middle East and a large deficit in its pension schemes.

    In particular three building projects in the UK had resulted in hefty losses:

    The £350m Midland Metropolitan Hospital in Sandwell: opening delayed to 2019 due to construction problems

    The £335m Royal Liverpool Hospital: completion date repeatedly pushed back amid reports of cracks in the building

    The £745m Aberdeen bypass: delayed because of slow progress in completing initial earthworks

  11. https://www.standard.co.uk/comment/comment/the-taxpayer-should-not-pick-up-the-tab-for-carillion-s-crash-a3740246.html

    1. Carillion is not a business that is going to collapse quietly, and neither should it. As a construction company it has been involved in the building of some of the biggest infrastructure projects in the country, including HS2.

      As a leading outsourcer of what had been the preserve of government and a major participant in public-finance initiatives, it became a large operator of — and service provider to — schools, hospitals, student accommodation and military bases up and down the country.

      It is home to several of the great names of the past: Tarmac, Mowlem and Alfred McAlpine — none of whose founders, giants of their time, could ever have believed that it would come to this.

      But, most of all, it counted the Government among its main customers, which means the biggest casualty of its collapse may be the taxpayer. However strong the Prime Minister’s instinct is to look the other way, she will find that Downing Street is in the frame.

      And it will need to be a big frame. The business employs tens of thousands of people; it has debts of about £900 million; it has a deficit in its pension schemes of a further £500 million; and it has very little to sell that will make much of a dent.

      Much as Downing Street might like to pretend otherwise, this is as much a political as it is a business story. The company has gone into liquidation not just because British construction firms have always behaved as if they could defy financial gravity. Its demise is also the consequence of the relentless application of a neo-liberal political philosophy that for years has elevated financial engineering above real engineering; off balance-sheet finance above paying for things openly; and lauded the private sector above the public sector.

      It has fostered the belief that there is no financial challenge that cannot be solved by a deal, a sleight of hand, a willingness to screw suppliers and a taste for creative accounting.

      You see it in the way the Government runs the public finances. It is less visible but nonetheless prevalent — in the financial swamp that is the private finance initiative and where Carillion sought to make its mark.

      Thus the collapse of Carillion is an indictment of management but one in which the Government, Whitehall, City bankers and even investors are also complicit.

      That is why it’s right that there be no taxpayer bailout and no gerrymandering with the pension scheme, as the Government tried to do with Tata Steel.

      Taxpayers are already the victims; any further costs now have to be borne by the financial community, the bankers and the shareholders.

      (Got a funny feeling Black Rock was a hedge fund that made money out of shorting Carillion shares and I think the ES Editor is an adviser - just saying - Ed)

    2. Knew I'd seen it somewhere this on Political Scrapbook website:-

      Last March, when Osborne was still in Parliament, he revealed he was working one day a week for the Blackrock Investment Institute. The entry also notes that he expects to receive equity in the company.

      Now it has emerged that Blackrock is among financial speculators and hedge funds who bet that Carillion’s share price would fall after the company issued profit warnings last year.

      The Financial News website reported:

      “BlackRock, the world’s largest fund manager, is among a group of investors to have won from the collapse of Carillion, the UK construction company that went into liquidation this morning.”

      The payout to Blackrock and others who backed a fall in Carillion’s share price was £80 million, according to an estimate from IHS Markit reported in the Guardian.

      The article ads that “much more [is] likely to have been banked” by the firms since the initial slump.

      Osborne can’t claim to champion the public interest while working for a firm benefiting from taxpayer’s losses…

    3. Good job, JB

  12. Good spot Jim. More than a whiff of corruption in this latest scandal....

    1. "George Osborne to be paid £650,000 for working one day a week
      Former chancellor declares six-figure salary for job with US fund manager BlackRock, for whom he will work 48 days a year"

      All that insider knowledge must have been special...