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Privateers survive by state subsidies

27 October 2017

Queen’s University Medical Centre, Nottingham. The NHS trust terminated its £200 million services contract with Carillion from April 2017. Hygiene was not up to standard. Photo David Lally CC BY-SA 2.0

The crisis afflicting the Carillion construction and outsourcing giant we reported in mid-October is more widespread. Further figures now reveal the perilous situation facing other major privatisation and outsourcing companies – Mitie, Interserve, Capita (and Carillion).

Privatisation and outsourcing was the ideological lynch-pin of Thatcherite philosophy. Private is good, public is bad; private can run services without the waste of public entities; private is healthy, public is terminally ill; profit driven services deliver better than non-profit services.

'They have a lifeline of public subsidy.'

Each of these four companies is now in dire straits. Without massive boosts from public sector contracts they probably would have gone bust. In the last 10 months contracts have been awarded to these companies worth over £2 billion, 450 different public contracts ensuring that they have a lifeline of public monies, public subsidies. Over the last four years they have taken £16 billion worth of public contract work.

Creamed off

The government refuses to state how much profit has been creamed off by these companies, claiming commercial confidentiality. However Interserve and Carillion have seen their share value plummet by 30 per cent and 70 per cent respectively in recent months as their incompetence and mishandling of their contracts spiral out of control.

They will bring their begging bowl to the government for more cash or shift the crisis onto their employees. Or otherwise they simply withdraw from failing contracts, leaving wide swathes of public sector provision from health care to emergency services across the UK in limbo and crisis.

Now is the time to bury privatisation, bring privatised public services back under public control and kill the parasite of the market. Private provision and the market do not work; it is nothing more than legalised robbery of public assets and destruction of much needed public services.