Monday, 22 January 2018

The Carillion Fallout

There's absolutely no doubt about it - the political fallout from Carillion's collapse is massive and at a stroke, completely altered the whole position relating to any further privatisation agenda the Tories might have been considering. In addition and as a bonus, it serves to highlight even further the failures of already outsourced public sector services and as if that wasn't enough, it's drawn renewed attention to the disaster called PFI, so beloved of Brown and Blair. 

Try as she might to put a brave face on things, - 'I will fine greedy bosses who betray their workers' - Theresa May and her government has now comprehensively lost the argument in the public/private debate with such hollow words. Jeremy Corbyn has been given a massive amount of ammunition in order to seize the non-Brexit agenda thanks to the public now being well aware of what happens when favoured private sector behemoths fail. There is very much a feeling in my mind of a number of celestial bodies coming into alignment and it must surely be good news for us and the criminal justice sector generally?

Lets start with a bit more insight into things leading up to the Carillion failure with this edited extract from the FT:-

Lack of political support doomed Carillion

As Carillion’s seven-strong management team sat down with its 160 bankers and advisers in Clifford Chance’s offices in Canary Wharf last week, they were confident they could still save the company from collapse. There was just one hitch. All the deals relied on state backing. By Sunday, and seeking just £25m in forward funding at an “ill-tempered” Cabinet Office meeting, Keith Cochrane, the company’s interim chief executive, found that support for the company had finally run out.

“We were reasonably confident,” says one person close to the board of Britain’s second-biggest construction company. “The one aspect that was vital was the support from the government.” What the Carillion team did not know was that when ministers arrived at the meeting, they had all but made up their minds. The political heat was high. Carillion executives left Westminster empty-handed.

By 7am on Monday Carillion, a business worth more than £2bn only 18 months earlier, was forced to announce that so dire was the state of its finances it would be liquidated, not put into administration. The decision sparked one of the largest financial collapses in recent UK corporate history; its effect seen on countless deserted building sites across the UK, hitting tens of thousands of workers, and in its operations in Canada and the Middle East.

The repercussions of Carillion’s spectacular bankruptcy after executives left the business with just £35m in cash, more than £1.35bn in debt and a £587m pension deficit have only just started to unfold. And fingers are being pointed at the management. “In the good old days the commercial rottweilers would have been through any contract. They never would have made lossmaking bids. But that all had changed. There was too much emphasis on short-term cash and they never really kept a close watch on the business,” says the person close to the board.

Less than a year ago, Carillion was still in favour among institutional investors in the City of London. Auditing firm KPMG had raised no serious questions as it signed off on the accounts. Richard Howson, chief executive at the time, had told the company’s annual meeting that it had “made an encouraging start to the year”.


Remember when the Forensic Science Service was abolished and replaced with a free-for-all range of alternatives? It's all going wrong as reported in the Guardian last week and this bit sounds very familar:- 
"Conservative ministers wanted to create a market in which independent companies competed for business."
Falling forensic science standards 'making miscarriages of justice inevitable'

Police forces are failing to meet the official standards for forensic science, making miscarriages of justice inevitable, the government’s forensic regulator has said. In her annual report, Gillian Tully highlighted her growing concerns about the failure of some forensic firms used by the police to meet basic quality standards. It means innocent people could be wrongly convicted and offenders escaping justice.

The routine outsourcing of criminal forensic work to unaccredited laboratories worries Tully, with some not subject to independent oversight. She told the Guardian that without urgent action there would inevitably be miscarriages of justice, including in cases involving murder, rape and child abuse. “If you’re not finding indecent images of children on someone’s phone when you should be, that’s a miscarriage of justice as much as if someone was wrongly convicted of a crime,” Tully said.

The government abolished the Forensic Science Service in 2012, which was the primary provider to the police and courts, resulting in forensic work being transferred to in-house police laboratories and private providers. Conservative ministers wanted to create a market in which independent companies competed for business. But most forces appear to be behind schedule in bringing their own laboratories into line with official standards, the regulator’s latest report shows. Just a few met the October deadline to gain formal accreditation to carry out digital forensic science work.

Police are also outsourcing large volumes of digital forensic science casework – the analysis of phones, computers and CCTV – to low-cost private forensic labs without any accreditation or oversight, the report said, describing this as “unacceptable”.

“Quality standards are not a nice-to-have extra that, if we have any money left, we’ll do some quality,” said Tully. “Doing something that you can’t necessarily stand behind in court is just inappropriate at every level.” The regulator said she would be examining whether failures to follow correct procedures in digital forensic science could have played a role in a number of high-profile rape cases that collapsed before going to trial. “I have formally requested more information on those recent cases,” she said.


With HMP Liverpool in the media spotlight last week following the official publication of the damning HMI report, the POA representative - I think it might have been their new Chair Mark Fairhurst - gave a bravura TV performance that covered the failure of 'Fair and Sustainable', regional and National HMPPS management, the MoJ, Carillion and in the process, made it plain the previous Governor had been scapegoated. It really must be time for Michael Spurr to fall on his sword in order to try and protect the Minister and failed Tory Party policies. 

Whilst we are discussing the dire problems at Liverpool, look where the drive to cut costs gets us as part of this whole contracting-out culture. This on the BBC website:-

Healthcare budgets have been cut at a prison described by inspectors as "Britain's worst".

A damning report on HMP Liverpool on Friday said it was "squalid". The BBC has now learnt Lancashire Care NHS Trust is leaving its contract with the jail in March citing the £6.7m it is paid to provide healthcare as "unsustainable". NHS England has offered new providers a five-year contact at £6.5m per annum - £200K less than Lancashire Care. It has said when a new provider is found, it can bid for additional money to develop the service.

Since 2011, there have been at least 17 suicides at the Liverpool prison, one of the highest figures in England. Healthcare staff have told the BBC that in recent months, pressures in the unit have contributed to at least three deaths, and the inspection report said staff shortages had had a negative impact on all aspects of health services.

Lancashire Care NHS Trust told NHS England, which commissions services, it had exhausted all efforts to recruit new staff and the price it was paid made the service "financially unsustainable". NHS England has advertised a five-year contact at £6.5m per annum but so far no providers have been forthcoming. The BBC understands NHS England will now speak to other trusts to persuade one to take over the healthcare services at HMP Liverpool.


Things are moving fast and there are already signs that politicians are beginning to sense the game is up and as we know, the MoJ contracting team are particularly inept. This in the Independent:-

Urgent review of £300m arrest warrant contract needed in wake of Carillion collapse, MPs demand

A £300m state contract to pay private firms to arrest people for not settling court fines must urgently be reviewed in the wake of Carillion’s collapse, MPs on an influential committee have said. Both Conservative and Labour members warned the new deal risks creating a “monolithic” nationwide provider, unable to properly monitor staff who will probably be physically restraining members of the public.

MPs on the Justice Committee also told The Independent the deal could put service delivery at risk, by potentially putting “all our eggs in one basket”, with a single firm enforcing warrants across the country. Their call to review the process comes as the Ministry of Justice (MoJ) tries to reduce spending following years of deep cuts, with civil servants hoping the new deal can deliver £3m of annual savings.

But the department’s outsourcing activity has repeatedly come under fire, with millions of pounds wasted and lucrative contracts handed to firms like G4S, which landed a 2017 deal despite having been fined amid a fraud inquiry. Monday’s collapse of Carillion has led to checks across Whitehall to ensure further public service providers are not at risk, leading members of the Justice Committee to shine a light on the MoJ’s current tendering processes.

Civil servants are expected in February to announce winners for the new contracts, which will see either several regional firms or one large national company paid some £290m to enforce warrants of debt collection and arrest for the courts. The Independent has already reported how business insiders sounded the alarm over the tender which they say is skewed towards favouring a big national company.

Labour Justice Committee member and former police minister, David Hanson said there is now enough concern to merit the department looking at the tender again. He said: “In the light of the collapse of a major single provider, it is right that there is more due diligence done on the tender for this prior to the issuing of any contract.

“We do not want a situation whereby one huge provider tenders for business, at a rate that offers a low profit margin and then finds themselves struggling to meet the obligations as has Carillion.” He was joined by Conservative committee chair Bob Neill who said there is a “genuine worry about putting all our eggs in one basket with a single provider”.


It was interesting to see that on last weeks BBC1 Question Time, tory MP Margo James was shouted down and called a liar by an angry audience when trying to deny that privatising the NHS was on their agenda. Post-Carillion, the Tories are definitely getting rattled judging by this also in the Independent:-

Senior Conservative MP urges Jeremy Hunt to put the brakes on backdoor NHS privatisation

A senior Conservative MP has called on Jeremy Hunt to put the brakes on plans which campaigners have previously claimed could open the NHS to privatisation. Sarah Wollaston, the chair of the Commons Health Committee, has written to the Health and Social Care Secretary urging him to delay a new contract for Accountable Care Organisations (ACOs) – due to be implemented later this year. She claims there is a “great deal of concern” over the plans which she considers “have not been well aired publicly up until now”.

According to the House of Commons Library, the little-known policy is a model of healthcare organisation where a provider or group of providers takes responsibility for the healthcare provision of a certain area. The providers are expected to take responsibility for a budget. The Government hopes the plans will dissolve the boundary between health and social care systems and integrate services, with the aim of improving the health of local populations. But critics of the planned system claim it would open up the NHS to privatisation and have launched a legal challenge against the changes.

The Department for Health and Social Care have previously strongly rejected such claims, adding it is “misleading” and “irresponsible scaremongering” to suggest ACOs are being used to support privatisation of the NHS. In her letter, Ms Wollaston said she is requesting the Government delay the introduction of the new contract for ACO until after the Health Committee “has taken the opportunity to hear evidence on the issues around the introduction of accountable care models to the NHS”.

She said: “As I am sure you are aware, a great deal of concern has been expressed about the development of ACOs in the NHS. I expect the Committee to consider these concerns, and the responses to them, in the course of its inquiry into sustainability and transformation partnerships, announced last autumn.”


It's probably as good a time as any to put a tentative step into economic theory and this is an interesting piece in a newspaper we've never featured before, a Scottish one, the National and the first to my knowledge to call-out the Carillion debacle for what I think it is - an old-fashioned ponzi scheme:-  

The Carillion story is proof our economic system is obsolete

The story of Carillion going into liquidation this week is more than just another business going bust with a pension fund gap. It’s more than a business story – it’s another warning sign that one of the key foundations of our entire economic system is failing. I have been writing in recent weeks about the need for a completely new approach to economics and therefore society. It is a viewpoint I first developed back in the late 1990s and in my 2001-2002 set of reports on what we called the “e-conomy” for The Herald and Sunday Herald. Many leading economic thinkers are now calling for a new economics and more and more think tanks and institutions are lobbying for reform.

Each economist or lobby group seems to have their own pet heterodox policy that they want adopted; sovereign money (Government-owned banking and currency creation), basic income, environmental sustainability modelling, zero growth (not as dumb as it seems) and multiple fairness and equality measures that you can bolt on to our neoliberal economic system to improve it. However, I have come to believe that is part of the problem. Almost no-one is talking about redesigning our economic system from the core principles outwards.

Take for instance the adoption by David Cameron in 2010 of wellbeing as a measure of economic progress. The Joseph Roundtree Foundation, Oxfam, the New Economics Foundation and several other key progressive forces championed that well-meaning move, but if it’s only an add-on to a corrupted and failing economic system, can any new metric seeking to address the symptoms and not the root causes of economic failure ever work?

Looking at the key and interlinked cornerstone beliefs of today’s dominant neoliberal/neoclassical economic system (Financialisation, Consumerism, Small Government and Globalisation) I can see signs that they are all failing. It’s going to get worse unless we do some serious rebuilding at the core of the system rather than just papering over the cracks with nice sounding new measures that tick boxes but change nothing.

Firstly, the issue with “Financialisation” is plain to see – the UK and many other western nations became over-dependent on the finance sector. That was the first cornerstone to crack in 2007, and the risk associated with the finance sector has not fallen sufficiently, and housing in London and the south east can still be described as bubble-like. But also the financialisation of everyday lives through easy credit, and the propensity for people to borrow to fund even basic consumption rather than by residual income, could still bring a personal credit crunch.

If inflation rises further, and interest rates are used control it, debt-ridden consumers will stop spending and the economy will tailspin.

The second cornerstone – “Small Government” – could also lead to the next economic crisis. We all understand the impact of light-touch regulation on banking but the negative impacts of outsourcing are just beginning to bite. PFI costs Scottish councils a billion a year and ironically Labour (who championed PFI in government) now talk about nationalising them – but that can cost more than maintaining them in many cases. Massive outsourcing companies like Carillion, Serco, Capita and Interserve grew out of the outsourcing boom, winning massive Government contracts at ultra low margins and squeezing costs. Those companies swapped margin for turnover and long-term contracts and so had to keep growing and winning more and more government work to pay the bills, wages and make returns to shareholders.

However, with austerity, the budget squeeze means that the outsourcing companies are unable to win enough new contracts to refinance their massive contracted outgoings. We have a phrase for that – we call it a Ponzi scheme, and Carillion is the first warning sign of what might become a new financial crises.

Ironically, austerity, the automatic response to fiscal deficit if you believe in “Small Government”, the driving force behind outsourcing, is now killing it. The drive for smaller government privatised profits in the good times and now we are nationalising the losses and bailing out pension schemes. Scottish Water, the Royal Mail, East Coast Rail etc all prove that private sector isn’t always more effective.


Finally, earlier on I mentioned PFI and to round this off lets have a quick trip down memory lane courtesy of a regular reader who pointed me in the direction of a brilliant 11-page Private Eye Special Report from March 2004 An Idiot's Guide to the Private Finance Initiative by the renowned investigative journalist Paul Foot. Well worth reading in full and highly enlightening as to how we got to where we are now, here's just the opening taster:-

This is the story of the private Finance-Initiative: how it became a jewel in the crown of New Labour, its savings, its costs, its pitfalls and windfalls, and how it changed the face of British accountancy and British politics...

Wind in the Willetts

Norman Lamont tinkered with it. John Major approved it. But the intellectual thrust for the idea of the private finance initiative (PFI) came from David Willetts, the Tory frontbencher nicknamed "Two Brains". In a pamphlet in 1993 called The Opportunities for Private Funding in the NHS, published by the Social Market Foundation and financed by the private health insurance company BUPA, Two Brains came up with a brainy idea. Instead of paying for hospitals by public funding, why not get reliable old private enterprise to build and run them - and then, at the end of the process, inherit them too? 

When he wrote the pamphlet, Willetts was a consultant to Healthcall, a private health firm. (In 1997, when the Tories lost office, he became an adviser to the Dresdner Kleinwort merchant bank, which rapidly became one of the great beneficiaries of PFI.) But back in the early 1990s, two brains were rather too many for Tory leaders of the day and the idea of PFI wasn't very popular in the treasury either. Senior civil servants liked to keep tight control on NHS spending and old-fashioned mandarins there felt the radical ideas of Two Brains might be going too far. 

When Kenneth Clarke succeeded Lamont as chancellor, he endorsed PFI and wrote it more firmly into the government's programmes. But he insisted that PFI would only work if the whole of the financial risk of a project was transferred from the public sector to the private sector. This caused a lot of concern to private contractors and banks. Their directors were prepared to bid for government contracts for which the government was eventually responsible, but were not at all happy about bidding for contracts for which private contractors might be held liable. 

Another worry was the Labour opposition whose MPs were inclined to oppose such measures as "creeping privatisation". So although Two Brains' theory was officially accepted by the Tory government, it never really got off the ground. As predicted by the sceptics, the idea infuriated Labour and the trade unions in 1996 the TUC vigorously opposed PFI and in a Commons debate on 1 May the same year, Labour frontbencher Sam Galbraith got to the root of the matter. 

"The private finance initiative", he concluded, "is basically all about government bodies borrowing money but not having it set against the public sector borrowing requirement." He forecast: "Today, the private sector will only get involved in the PFI within the health services if it carries no real risk." The result, he said, was "a financial sleight of hand, a massaging of figures as a result of which the increase in the public sector borrowing requirement is not shown and is thus a matter of deceit." 

In another debate another Labour frontbencher, Harriet Harman, denounced the concept of PFI in the NHS in terms that won warm support from her colleagues. "When the private sector is building, owning, managlng and running a hospital" she declared, "that hospital has been privatised." Yet unknown to Harman, the leaders of her party were engaglng in secret discussions to make sure that if and when they came to office, the private sector would do precisely that: build, own, manage and run new hospitals. 


  1. Polly Toynbee in today's Guardian:-

    The era of “private good, public bad” is drawing to a close. Unshakeable faith in Margaret Thatcher’s privatisation creed is being killed off not just by counter-ideology, but by the sheer irrationality, expense and failure of so many private contracts. Carillion’s spectacular collapse makes big headlines, but out of the spotlight local councils, under extreme stress from cuts, are cancelling contracted-out services. Why? Because it saves them money and improves services. I have been talking to councils around the country where in-sourcing is how they best cope with savage budget reductions.

    Start in Thurrock: there is nothing leftist about this council, controlled by minority Conservatives propped up by Ukip. In 2015 they bought out their Serco contract, bringing office services back in-house. Lyn Carpenter, the council’s chief executive, is blunt: “The contract was a disaster. Nothing was flexible, everything set in stone. If we wanted anything done differently, they said ‘That’ll cost you.’” In that inflexible 15-year contract, Thurrock says, everything was still done on paper, as Serco had no incentive to modernise. Escaping it was “quite a fight”. Thurrock paid £9.9m to buy out a £19m-a-year contract, but the cost was recouped through extra efficiency and saving “the £3.6m a year profit they were taking – money not spent locally”.

  2. Observer yesterday:-

    Labour has warned that the crown representatives who are supposed to police public sector suppliers such as the failed construction company Carillion face potential conflicts of interest, as its own research showed that several hold external directorships and one is a Tory donor.

    A dossier produced by the party showed that the former admiral Sir Robert Walmsley, who is responsible to the taxpayer for monitoring the outsourcing multinational Serco, also sits on the board as senior independent director of two defence contractors, Ultra Electronics and Cohort plc.

    Daniel Green, the crown representative for the energy sector, is a Conservative donor who has given £330,000 to the party and £15,000 to Theresa May’s successful leadership campaign in 2016. His profile on the LinkedIn network says he is the chief executive of a private equity firm, Liquid Business.

    Jon Trickett, the shadow Cabinet Office minister, said such relationships amounted to “an astonishing conflict of interest and yet other example of the chumocracy”. Some of the crown representatives, he added, “turn out to be people who actually work for companies that have contracts with the government”.

    1. And sky news a few minutes ago. The outsourcer are blaming the government for creating a dysfunctional market.


    2. The boss of outsourcing giant Serco has taken aim at the Government after the collapse of rival Carillion, saying it had created a market where only the "dumb and the desperate" would bid for public sector contracts.

      Rupert Soames said in a newspaper article that ministers could not escape "some responsibility" for forcing companies to take big risks when carrying out public services.

      Carillion, which employed 43,000 people including 20,000 in the UK, went into liquidation a week ago, mired in £1.3bn debt and also saddled with a vast pensions deficit.

      It was engaged on a variety of public sector contracts from helping construct the HS2 rail link to delivering school meals, maintaining prisons and building hospitals.

      Writing in the Daily Telegraph, Mr Soames described how Serco had faced similar issues in 2014, wiping £1.5bn off its balance sheet and taking £450m of losses on Government contracts – but had "made it through the valley of the shadow of death".

      He pointed to the problem of long-term fixed price public sector contracts potentially being derailed by unexpected changes such as the increase in the minimum wage.

      Mr Soames added that the deals could be "punitive" and very costly to exit, resulting in a market which is over reliant on large businesses.

      "Government, as the sole customer, cannot escape some responsibility if the result is a dysfunctional market, in which only the dumb and the desperate want to compete," he said.

      Mr Soames rejected arguments advanced by some following the collapse of Carillion into liquidation last week, that services ought to be brought back into the public sector.

      He argued that monopolies "always become inefficient and focused on protecting their own interests, rather than those of their customers".

      Mr Soames did not lay all blame on the Government, also highlighting the way some firms were loading up with debt and how banks were allowing them to do so.

      But he said that having favoured private companies too much in the 1990s and 2000s, the pendulum has now "swung too far the other way" on public sector outsourcing.

      "We need to bring it back to centre if suppliers are going to want to work for Government to deliver public services," he said.

      "And suppliers need to stop over-promising and under-performing, stop accepting risks they know they cannot manage, and be more transparent and accountable."

  3. Everyone remembers the great outsourcing scandals. The Olympics. Tagging. Transporting prisoners. Emergency service phone services. All big news stories that somehow get lost in other news stories a week later and dragged up again when the next outsourcing scandal breaks.
    But there's other important issues that don't really resurface that should be considered within the Carillion debate.
    Athos for example walked away from its disability assessment contract about 2years ago at a cost of over £100m.
    There was the outsourced education, training and apprenticeship company, that went belly up without warning about 18mths ago costing £10s of millions, (I can't remember their name, but was noted on this blog.)
    It's important too to also consider the governments argument that Carillion went bust not because of its public sector contracts, but it's private sector ones. That begs the question of how much money from public sector contracts is being used to subsidise private contracts? Will Interserves portion of the governments £342m go on making probation services better, or be used to subsidise private loss making contracts?
    The big accountancy firms like PwC and KPMG have rightly come under the spotlight since Carillion collapsed. But they are also the companies the government use, and pay millions to each year in consultancy fees. The incestuous nature of the relationship between these companies need to be broken up.
    It's almost amusing to hear ministers like Grayling when there asked about why Carillion were given multi billion pound contracts after continued profit warnings. It was a joint bid they say, it was given on the understanding that the other two companies would step in and absorb Carillions obligations if Carillion went bust. Isn't that also an admission that they knew Carillion was on the brink?
    So too the finger pointing at KPMG by the government for giving Carillion the thumbs up. But isn't that what Grayling did by giving them Hs2 contracts? With such large contracts it gave Carillion the opportunity to extend its credit notes to its sub contractors and even run up bigger bills.
    The Carillion collapse is huge, and likely to headline for much longer then other outsourcing scandals, which is a good thing.
    Not many of the general public paid much attention to Carillion, many probably had never heard of them. Yet there's other giant companies with large government contracts that are creeping very close to the same page as Carillion who are even less well known.
    The Labour Party need to grab the Carillion fallout and shake the bones out of it, expose its seedy relationships with government and other outsource companies, it's conflicts of interests, and remind the public that the new buzz word being used by local councils is insourcing.


    1. "The Labour Party need to grab the Carillion fallout and shake the bones out of it, expose its seedy relationships with government and other outsource companies, it's conflicts of interests, and remind the public that the new buzz word being used by local councils is insourcing."

      Quite agree!

    2. Rupert Soames is, of course, brother to Tory Grandee Nicholas & grandson of mythical British Bullgog Winni Churchill.

    3. Grayling to be quizzed by Transport Committee this afternoon:

      4.45 pm

      Transport - Oral Evidence Session
      Rail electrification

      Rt Hon Chris Grayling MP, Secretary of State for Transport, Department for Transport

      Location: The Grimond Room, Portcullis House

    4. Universities have just announced they are to take widespread industrial action as a consequence of changing pensions and replacing them with retirement plans.

      This must be the most crisis ridden Government of all time.

    5. Sky...

      Universities across the UK are to face major disruption after workers voted to go on strike in a row over pensions.

      The University and College Union made the announcement, which employers have described as "disappointing".

      "A solution to the significant funding challenges facing USS (Universities Superannuation Scheme) needs to be found," said a spokesman for Universities UK (UUK), the representative organisation for the country's universities.

      "UUK's priority is to put USS on a secure and sustainable footing while offering attractive, market-leading pensions - the very best that can be afforded by both employers and employees."

      More follows...

    6. Just another outsourcing scandal with significant cost to the taxpayer to note.

    7. Tax credit claimants who suffered as the result of a botched outsourcing plan have been paid just £14 each in compensation each, it has emerged.

      Scandal-hit Concentrix adjusted or terminated around 108,000 cases of claimants' tax credits - nearly a third of which were overturned at appeal.

      HM Revenue and Customs (HMRC) ended its deal with the contractor after a series of problems came to light.

      Records released in Parliament showed HMRC had paid a total of £18,035 to 1,271 people.

      Shadow policing minister Louise Haigh, who requested the information, said the amount was “pitiful and insulting”.

      She added: “Concentrix walked off the job with £32m of taxpayers' money in their pockets.

      “Yet now we learn that the average amount people can expect in compensation is less than £15. That's a pitiful amount and it is simply insulting to the victims.

      “The company caused real damage to people's lives and was proven to be wrong in 87 per cent of cases that went to appeal. I can't think of many cases where such terrible failure has been rewarded so well and in such stark contrast to the treatment of the victims.

      “The Concentrix and Carillion scandals have shown that too often the bosses walk off with a pay-out while we pay for their mistakes, and the victims are left struggling. Tory privatisation of our public services has been a disaster, and it's about time ministers started learning the lessons.”

      The HMRC contract was supposed to tackle fraud and error in the tax credit system by stopping payments to claimants who were not entitled to them.

      But almost 90 per cent of people appealing against losing their tax credits won their cases, seeing Concentrix sacked over the "humiliating hardship and debt" it forced on people, sending many to food banks.

      The Government subsequently promised not to outsource tax credit fraud investigation work to private companies.

      Jon Thompson, head of HMRC, told the Treasury Select Committee at the time: “We will not be going back to the market to seek a third party to help us in any way with the tax credits system.”

      But the former Work and Pensions Secretary, Damian Green, later said his department would appoint an “external” provider to help claw back money from claimants of the separate Income Support benefit from April.

      The new figures were revealed days after construction giant Carillion collapsed, sparking concern over the scale of Government outsourcing.

    8. "Scandal-hit Concentrix adjusted or terminated around 108,000 cases of claimants' tax credits - nearly a third of which were overturned at appeal."

      The taxpayer foots the bill for 108,000 'outcomes' and then the taxpayer picks up the bill for 90% of those decisions going to appeals, with nearly 40% of them being successful appeals?
      Is austerity only necessary because of botched outsourcing?

    9. At least there are still some hardcore wankers at work:

      "But the former Work and Pensions Secretary, Damian Green, later said his department would appoint an “external” provider to help claw back money from claimants of the separate Income Support benefit from April."

    10. The biggest rail workers union has launched an angry attack against the Transport Secretary ahead of his appearance before a committee of MPs, branding him a “specialist in failure.”

      Chris Grayling will be questioned on Monday by the Transport Select Committee over the controversial decision not to go ahead with three rail electrification schemes.

      The Rail, Maritime and Transport union said the full “charge sheet” against the minister should be taken into account.

      The union claimed this included:

      – Failure to take action in advance of the collapse of construction giant Carillion despite repeated warnings that the company was in trouble.
      – Failure to engage in serious talks with the trade unions in the ongoing rail guards’ disputes in England despite politicians in Wales and Scotland taking a leading role in brokering solutions on the same issue of staffing and the role of guards.
      – Failure to take action to tackle problems at the Southern Rail franchise.
      – Failure to be in the country on the day of the latest rail fare increases earlier this month, when he went to Qatar.
      – Deciding to axe three electrification projects.
      – Agreeing to a £2 billion “bail out” on the East Coast Main Line.
      – Failure to take action to stop the “decimation” of bus services.

      ‎RMT general secretary Mick Cash said: “Many, including plenty from Chris Grayling’s own side, are asking just how long this can go on?

      “RMT welcomes the fact that Mr Grayling is being called in to account for his actions over cancelled rail electrification projects but that is only one issue where he should be under forensic investigation.

      “RMT has tried repeatedly to engage with the Transport Secretary. He has failed repeatedly to listen to the genuine concerns of front-line transport workers.

      “That is a major reason why he continues to blunder on from one crisis to the next.

      “The continuing failures on Britain’s transport services shame the nation and the buck stops with the Transport Secretary.”

      The select committee wants Mr Grayling to outline the reasoning that underpins his decision to replace three rail electrification schemes with bi-mode trains.

      Plans to modernise the line from Cardiff to Swansea, the Midland mainline and tracks in the Lake District were dropped last summer.

  4. Black Rock were responsible for managing Carillions pension fund, yet astoundingly made millions betting against their demise.
    Does George Osborne have questions to answer?

    As an adviser to BlackRock, the former Chancellor may have questions to answer after it emerged it is among group of investors to have made millions from Carillion’s demise. 

    If he has shares in BlackRock, the world’s largest fund manager, then he is set to personally benefit from last week’s liquidation, which has put thousands of jobs at risk. 

    Mr Osborne has sought to distance himself from the troubled construction giant. 

    The newspaper he edits last week ran a leader column criticising the Government for awarding Carillion £1.3billion in contracts after it issued its first profit warning in July last year. 

    The editorial read: “Why has the state found itself so dependent on a few very large outsourcing firms?  
    “The failure to use a variety of smaller, mid-size companies undermines innovation and leaves services hostage when things go wrong.” 

    But when he signed off a Carillion contract as Chancellor in 2014, Mr Osborne declared: “It’s great to see successful companies like Carillion winning contracts around the world.” 

    1. George gets paid £650,000 a year for one day's work a week.
      It not hard to see how the Oxfam report published today puts 82% of the world's wealth in the hands of 1% of the population, or that half the worlds wealth is held by just 42 people.


    1. For both prisoners and staff, our jails are less safe now than at any time since records began – with more self-inflicted deaths, self-harm and assaults than ever before. The report on HMP Liverpool last week by Peter Clarke, HM chief inspector of prisons, recorded the worst conditions inspectors had ever come across.

      As tempting as it is to point to the need for more money and prison staff, the truth is that the real culprit is much closer to home. It’s Joe Public.

      Despite the wealth of evidence to the contrary, the public view of prisons is still that they’re “holiday camps”. The longer the sentence and the harsher the regime, the better. Ask about deaths in custody and often the answer is: “Who cares?”

      Who cares? Only a small minority. But we all should, and until that changes politicians have little incentive to improve things, despite the evidence that reoffending costs £15bn a year.

      We desperately need an honest conversation – an independent inquiry into exactly what we want our prison system to deliver in terms of punishment, deterrence, rehabilitation, reducing reoffending and value for money.

      Once we have decided what we want the prison system to do, based on the evidence of what works, then we need to resource it to do exactly that.

      What is certain is that we need more money – much more money. The prison service has lost almost a billion from its budgets since 2011, frontline staff numbers are down by almost 7,000, and the promise of an extra 2,500 officers doesn’t mean much when far too many of them leave soon after joining, once they realise what a dangerous and thankless task they have signed up for.

      If we don’t act, a century from now our descendants will look back on the prisons of today with the same incredulity and horror that we feel about those Bedlams into which our great-grandparents tossed their damaged, deranged and disadvantaged.

      • Mark Leech is the editor of The Prisons Handbook for England and Wales

  6. Graylings been sneaky and underhand at the Transport Select Committee today. He is unable to be anything else.
    He created havoc at the MoJ and at no small cost to the public purse.
    The real cost of his stint as Justice Minister is still unfolding and still ongoing.

    I'd like to coin a phrase for him on here (just because he's so loved) if Jim dosent mind, and see if it pops up in use anywhere else.
    I'd like him to be known as the "Tax Payers Terrorist".
    He costs public finances billions.


    1. He does seem teflon coated.

    2. Only because he is not really challenged, do you not think that the select committee and Grayling aren't in it together. Has anything changed because of those questioned by the select committee NO is the answer. So he isn't Teflon coated its just how they play it to make it look like they are holding people to account or questioning them. I recall the probation questioning, interswereve said that they failed in their targets because they did not have enough money, so instead of punishing them for their failure they bunged them some more money. I am surprised that the government haven't paid Carillions debts off, just prints some more notes for our chums.

    3. He admits today that not only has he let virgin trains pocket a vast amount of public funds by terminating their contract early, but he's not ruling them out of future contracts.

    4. Tory ministers could let Virgin Trains take control of more rail lines despite a huge row over the firm receiving a "bailout".

      Transport Secretary Chris Grayling refused to rule out further franchises, despite confessing the firm "made a major mistake" and there will be less money than forecast for the taxpayer.

      He faced calls to quit last month when he let Virgin Trains East Coast, a partnership between Stagecoach and Sir Richard Branson's empire, walk away from its franchise three years early.

      The firm is expected to pay the government hundreds of millions of pounds less than the £3.3bn it originally promised for the London-to-Edinburgh line.

      Labour branded this a bailout, a word Mr Grayling has repreatedly rejected.

      Grilled by MPs today, Mr Grayling finally admitted there "won't be as much" profit to the taxpayer "as had been forecast".

      He added he was "not at all" happy with the current situation, adding: "This is a franchise that we clearly have not got right, the company hasn’t got right, it’s hugely frustrating."

      But he repeatedly refused to guarantee the firm won't be granted future rail franchises.

      He said the firm had not defaulted on the East Coast contract and was running a "good service".

      He told the Commons Transport Committee: "I have to do what is lawful as well as what is desirable.

      "I’m also constantly under attack from various politicians saying there are too many foreign companies in our rail network. This happens to be a British company in our rail network.

      "It may have made a major mistake here - do we want to exclude it permanently from all participation in the rail network?"

      Mr Grayling insisted he does not want "companies to abuse the system and milk it for money", and promised: "There's no question of handing anybody a bung... They will be held to every last inch of that contract."

      But he admitted there will be less money to the public purse than forecast.

      He told MPs: "The taxpayer continues to make a premium out of this, will make a premium out of this in all circumstances going forward - taking a substantial slice of the operating profit. The money that's been committed through the franchise period doesn't disappear in a puff of smoke. But it's certainly the case there isn't as much of it as had been forecast."

      Committee chair Lilian Greenwood accused him of letting private enterprise "off the hook".

      Earlier the pair clashed over the decision to cancel or downgrade rail electrification projects in South Wales, the Midlands and the Lake District. Mr Grayling told the committee it was better to focus on boosting capacity rather than electrification.

  7. Missed it yesterday, but apparently in HoC Esther McVey referred to Carllion's board's self-serving actions as "possible misdemeanours" & that workers' pensions would be (mostly) honoured by the pension protection fund.
    *tuts loudly, raises eyes to the heavens*
    And there was gloomy, pessimistic 'glass-half-empty' me thinking it might perhaps be major fraud & corruption worthy of jail terms.

  8. Monarch airline collapse - Transport Committee asked Grayling some very familiar questions surrounding public money being used to effectively bail out privateers of their financial responsibilities when business goes tits up, e.g.

    "Q6 Laura Smith: It has been reported that Monarch had £48 million of cash in the bank and significant other assets as well. The investment company Greybull Capital will obviously have a strong claim as a primary secured investor. Should there not be some sort of mechanism in place to ensure that Greybull contributes to the estimated £60 million costs of the CAA and DFT repatriation?"

    Apparently Greybull & Boeing profited from their investment in Monarch, whereas 6,000 people lost their jobs & UK taxpayer footed the bill for massive repatriation of stranded travellers.

    Tory support for private business continues its unqualified success.

    1. The Committee referred to was held last year; transcript of 22Jan hearing not yet published.