While the more downmarket end of our free and fearless press has been binging on Sleb cheapies, out there in the real world what Sailor Heath once called “The unacceptable face of capitalism” has been manifesting itself as construction and service company Carillion has been forced into liquidation by lenders who had lost patience and concluded that, no matter how long they waited, they were not going to get their money back.
Or maybe not
The effect was immediate: train cleaners, who get around their patch using vans supplied by Carillion, found their fuel cards had been cancelled. They have to either pay for filling up out of their own pockets or the trains don’t get cleaned. The company’s pension fund has a deficit of around £580 million. And the value of what can be liquidated is so little as to mean most shareholders will see very little of their money.
However, and here we encounter a significantly sized however, despite a financial situation that has been parlous for some time now, Carillion kept on paying shareholder dividends, so those not seeing their share capital returned have at least had their regular divi. Those were not the only dividends being paid: directors’ bonuses kept on being doled out, and the “clawback provisions” for these were relaxed in 2016.
That means Carillion’s directors got their extra wedge, safe in the knowledge that no-one could come and tell them to put the dosh back in the kitty. Even the Institute of Directors has cavilled at that move, frothing “It does no good to the reputation of UK business when top managers appear to benefit in spite of the collapse of the organisations that they are responsible for”. The tens of thousands facing the dole might not be impressed, either.
It is suspected that Carillion submitted unrealistically low bids for Government contracts to keep the workload up, but the combination of bidding too low and failure to keep control of costs meant that this practice just made matters worse. And there was more.
George bricking it big time
Despite the profits warnings, the Government just kept on awarding the firm work. And it is that which put the Tories on the spot. As they have been in office, either in coalition or alone, for more than seven and a half years, they have no credible way of blaming anyone else for the current mess. They slavishly followed the false god of “Private Good, Public Bad”, only to see it come back and bite them. This is their can to carry.
And there is no avoiding complicity: attracting deserved ridicule today has been the why-oh-why editorial from the Evening Standard, which has demanded “Why has the state found itself so dependent on a few very large outsourcing firms? Why was Carillion awarded huge contracts by the civil service, with whom rather than ministers almost all procurement decisions lie after they knew it was struggling last year?”
THE PROSECUTION RESTS
The Standard’s editor, the Rt Hon Gideon George Oliver Osborne, heir to the seventeenth Baronet, can answer those himself. As Chancellor of the Exchequer for six recent years, he was a full participant in the Carillion mess. This is also his can to carry.
When it came to Carillion, the Tories were absent elsewhere. That’s not good enough.