Monday, 15 January 2018

The Carillion collapse is a textbook example of Tory economics


The collapse of the construction and outsourcing giant Carillion is a textbook example of the Tory privatisation ideology in action.

We now have 43,000 workers worrying over their jobs; hundreds of public services at risk (including hospitals, schools, prisons & other public infrastructure); a government in chaos because they carried on handing out £billions in contracts to this stricken company even after three profit warnings; and a pension fund with a £600 million black hole in it (which will be bailed out by the taxpayer).

Meanwhile executives at the company stand accused of rewriting their bonus rules in 2016 (when the company was already in huge trouble) so that they could keep all their bonuses, even in the case of corporate collapse.

A bunch of private profiteers has walked away with stacks of cash, leaving the public to pick up the bill for sorting out the chaos they've created.

However, the problem is that the Tories are pro-privatisation extremists. There's no way they'd bring the services back in house to protect jobs and public services. Their fanatical hard-right ideology prevents them from doing that, so they'll scrabble around trying to get other private sector profiteers to take over Carillion's contracts, and likely pay extortionate inflated prices, because other private sector companies know that the Tories need them to take over the contracts more than they actually need the contracts themselves.

The corporate executives got rich. The shareholders were handed dividends every year as the company drained vast sums out of employees' pension schemes. And now the scam has collapsed, the Tories are going to ensure that the taxpayer covers the cost by bailing out the pension fund, and by re-tendering all the contracts at inflated prices.

From a taxpayers' perspective, or from the perspective of good governance, the Carillion collapse is an absolutely scandalous failure.

However from a Tory party perspective it's actually another success story, because it's yet another example of the private sector soaking up all the profits at the taxpayers' expanse, then dumping the debts onto the taxpayer when the hollowed-out husk of the company collapses into liquidation.

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