The Implosion of the Parasites
THE CHAOS CONTINUES and now even Tory commentators are openly wondering what use is Theresa May’s government. It’s obvious she has no beliefs, vision or policies to deal with the multiple crises facing her. She sold herself in 2016 as an experienced pair of hands and last year as “strong and stable”. But in the last two months of 2017, three senior members of the Cabinet resigned in disgrace and January’s botched reshuffle underlines the absence of talent in her increasingly politically bankrupt party.
The latest crisis is the collapse of the UK’s second largest construction company, Carillion, which was awarded £2 billion of government contracts during a period when it issued three profit warnings. The boss of Carillion - who also runs a financially ailing, tax-avoiding fracking company which has been given a government licence to extract shale gas in Kirby, North Yorkshire - continued, along with his co-directors, to get his multi-million pound bonus as it went into liquidation. It’s the customers, suppliers, employees, tax authorities, local communities and others who will really take the hit - not to mention the company’s pensioners: Carillion raided its pension funds to the tune of £600m. Carillion’s chairman - astonishingly - advised the government on corporate responsibility, despite its notorious blacklisting of trade unionists.
There’s an old-fashioned political scandal lurking beneath all this. Carillion’s boss was until recently the chief executive of the Wates Group, which gave £430,000 to the Tories over the last decade, including a £50,000 donation just before the last election. We clearly need an inquiry into the companies that are awarded government contracts and their financial ties to the politicians that award them.
After Carillion several things need to happen. Rules need to change so that companies cannot raid their pension funds while continuing to pay directors at ten times median company pay, paying a dividend or staying in business without supervision by a board appointed by its pension trustees.
More broadly, the whole racket of private financial initiatives (PFI) needs rethinking. It’s estimated the taxpayer owes over £222 billion to banks for PFI project liabilities - debts with staggering levels of interest. And we are due to hand over a further £200 billion to contractors over the next 25 years - despite evidence that these projects can be 40% costlier than relying on government bonds.
Among its many interests Carillion ran a range of PFIs in the NHS, including owning 11,000 hospital beds in a dozen hospitals and several general practitioner surgeries and community services. But under recent legislation, almost all NHS services could soon be delivered under a similar structure, with “tens of billions of pounds worth of NHS and social care budgets farmed out with neither parliamentary scrutiny nor public consent,” as Professor Allyson Pollock has pointed out.
Companies like Carillion are the ultimate parasites. They put in low bids to win the contract, sweat the sub-contractors and often fail to meet their obligations. They would not exist but for the government’s infatuation with private sector delivery, despite the excessive cost. John McDonnell is right to commit a future Labour government to bringing such deals in-house, something the Tories could - and should - do immediately.
It was not long ago that an elite consensus dominated British politics, that the free market was the most efficient provider - even of core state services - and that opposition to this, from the likes of Corbyn and McDonnell, was ideologically driven dogma. Now it’s the Tories who are the dogmatists, clinging repeatedly to a failed ideology that has asset-stripped our public services and piled up debts, redundancies and unfulfilled contracts. Labour’s policies, with a new emphasis on the delivery in-house of quality public services are laying the basis for a new community-oriented politics of common sense. » Congratulations to the three candidates backed by the Centre-Left Grassroots Alliance newly elected to Labour’s National Executive. And how fitting it is that one of the first acts of this first Executive to have a clear pro-Corbyn majority should be the replacement of the Chair of Labour’s Disputes Committee. Hopefully, this will close a divisive chapter in the Party where administrative measures were taken by sections of its apparatus as part of a rearguard action against the new forces energising the Party.
This is the editorial from February 2018 Labour Briefing