Jeremy Corbyn: Carillion collapse is a ‘watershed’ for outsourcing
Corbyn sees the collapse of Carillion, the company responsible for everything from building hospitals to providing school meals, as a “watershed” moment that proves that the private sector should not be running swathes of Britain’s public services. He said:
“In the wake of the collapse of the contractor Carillion, it is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced the public of billions of pounds.
“This is a watershed moment. Across the public sector, the outsource-first dogma has wreaked havoc. Often it is the same companies that have gone from service to service, creaming off profits and failing to deliver the quality of service our people deserve.
“The evidence is clear and it is everywhere. Look at the up £2 billion public bailout of Richard Branson’s Virgin and Stagecoach for their own failure to run East Coast rail properly – or the scandal of the NHS being sued by private companies like Virgin after losing a contract bid.
“Staff and patients in our NHS are facing shocking conditions this winter. Tory underfunding has caused the crisis, but privatisation, outsourced contracts and profiteering has made it worse.
“Our public services – health, rail, prisons, even our Armed Forces’ housing – are struggling after years of austerity and private contractors siphoning off profits from the public purse.
“It’s time we took back control. We not only need to guarantee the public sector takes over the work Carillion was contracted to do – but go much further and end contracts where costs spiral, profits soar and services are hollowed out.
“Labour will end the PFI rip off, put an end the private-profit-is-best dogma and run our public services for the benefit of the many, not the profits of the few.”
The revolution in outsourcing public services was started by Margaret Thatcher and continued by New Labour under Tony Blair. Since 1980 public services — from providing school meals to refuelling RAF aircraft — have been outsourced to the private sector. Questions have been about whether the taxpayer is getting best value for money from some contracts:
- Birmingham is progressively reducing its reliance on Capita
- As G4S was unable to cope with security for the 2012 London Olympic Games, members of the armed forces were drafted in.
- Metronet, which had been contracted to maintain and upgrade the London Underground, went into administration in 2007 and cost the taxpayer at least £170m.
- Overseas municipal provider Veolia has failed to give good service in several areas, including Camden, Sutton, Merton, Croydon, Mile End and West Hampstead.
- At several privately-run prisons over the past 18 months levels of violence have increased as spending and staff have been cut.
The lower cost alternative for building hospitals, schools, prisons etc: local authorities have access to cheap and flexible funding from the Public Works Loan Board, an arm of the Treasury that has been helping to finance capital spending by local government since 1793. Its interest rates are linked to those in the gilt-edged market which have been at exceptionally low levels since the financial crisis of 2007-08.