Let’s net all of these outsourcing, subcontracting, sharks!

24 January 2018

It is strange how Carillion's crash is no longer headline news, even though tens of thousands of workers are still in limbo, if not thrown out of their jobs or apprenticeships - and not just in Britain.
    And how ironical that this week we hear that the employment rate is at a record high!  Says the Office for National Statistics, “with 32.2 million people in employment in the 3 months to November... this is the biggest total since records began in 1971"!  So despite 19,500 Carillion workers and an even greater number in its 30,000 subcontracted suppliers, who could join the unemployed, “record” employment figures are being celebrated!!
    That said, the ONS does point to a ”small” problem with wages, which remain below inflation...  They could add, that many of these so-called “record” jobs are neither permanent, nor full-time and if they are, they are often 2nd tier, on low wages and with minimal conditions.  So it may be “employment” according to their definition, but on such jobs you don’t make a living.  This is not new.  And one of its main causes is precisely the serial outsourcing and subcontracting which relies specifically on casual workers on precarious contracts and low wages.  Which brings us straight back to Carillion.
An inevitable outcome
This company, which “spun” itself out of Tarmac in 1999 and acquired McAlpine, Mowlam and Wimpey, had turned itself into a giant subcontractor, stretching its greedy tentacles from Canada across its base here in Britain to Doha in the Middle East.  Not only did it undertake large construction projects (like HS2 and CrossRail), but every other possible kind of contract including 450 public sector operations to the tune of £16bn, from the maintenance of the goverment’s digital spying agency, GCHQ to the provision of 32,000 school meals as well as cleaning, building maintenance, portering, catering, etc., at NHS trusts, prisons, military bases, libraries, and much else.
    But by July last year already, there were “profit warnings” after 4 of its largest projects were hit by delays.  Speculators were betting on falls in the company’s share price; by then it had fallen by 39%.
    Before its demise 10 days ago, it had a deficit of almost £1bn and a £650m pension black hole - affecting 28,000 present and future pensioners.  The banks, which had already lent the overstretched company huge amounts (out of which it even dared pay dividends to shareholders!), now refused further help and crucially, so did minsters, fearing serious political fallout.
    So now the government is left limiting the damage, ensuring delivery of school and hospital services and paying pensioners out of the Pension Protection Fund.
    But most of the workers, except some on public sector contracts or those directly employed Carillion workers who might be transferred over to partners like Keir and the French company Eiffage at HS2, are likely to be left high and dry.
So is this a “watershed moment”?
Of course much is said about Transport Secretary Grayling awarding contracts to Carillion when it was already in trouble.  And now the dodginess of public-private partnerships, contracting out and outsourcing is suddenly “discovered” and criticised, no matter that under Tory and Labour this was systematic policy.  Labour’s Corbyn says Carillion should be a “watershed”.  Yet Labour is not against private provision.  It just wants “excesses” to be capped.
    No question, privatisation in all its shapes and forms was a bad deal for the public.  It wasn’t meant to be a good deal.  It was meant to make money for the private sharks - and it did.  This is precisely why Carillion, Capita, Serco, Interserve, Balfour Beatty, G4S, etc., are (or were) such huge profiteers for so long.  Under PFI deals alone, the government paid three times over the odds for public projects.  And now it has to bail out privatised care home providers like Four Seasons and even Branson’s Virgin East Coast trains!
    Does this mean that now things will change?  Very unlikely, unless capitalism itself ceases to exist!  Which won’t happen unless the working class (because no other class can do it) decides to fight and overthrow the system.  It is urgent.  The economy is not yet recovered from 2008's financial crisis, more speculative bubbles are developing and Brexit, with its costly “uncertainties”, looms.
    In fact if Carillion is out of the headlines it is probably by design: ministers and the City shareholders they represent, are panicking.  They know this crash is the tip of an iceberg.  Already, other giant subcontracting companies like Interserve, Balfour Beatty, and Capita are in deficit.  Carillion’s fall could well cause an avalanche.  However, the working class can offer a different outcome.  But only if it decides to use its collective strength to impose its own “takeover” - and for starters, at every level of social provision, to kick out the profiteers and begin to run society for the benefit of all.