So what the heck is Carillion and why should we care?
The company that runs Britain is near to collapse. Watch and worry: Carillion builds schools, roads, hospitals – and it’s meant to be a big part of HS2. What’s more, if it goes bust, the bill will be picked up by taxpayers
Why we should care:
To see what this means, take the HS2 rail link, where Carillion this summer was part of a consortium that won a £1.4bn contract to knock tunnels through the Chilterns. If Carillion goes under, what happens to the largest infrastructure project in Europe? What happens to its partners on the deal, British firm Kier, and France’s Eiffage? The project will need to be put back and the taxpayer will almost certainly have to step in.
Imagine that same catastrophe befalling dozens of other projects across the UK and you get a sense of what’s at stake. Jobs will be cut, schools will go unbuilt (just a couple of months ago, Oxfordshire county council pulled the plug on a 10-year schools project) – and the government’s entire private finance initiative (PFI) model for building this country’s essential services will be shaken to the core. The dirty secret of PFI and all government attempts to pass public services into the private realm is that the shareholders make profits while the taxpayers remain on the hook for any losses.
This is exactly the type of private/public infrastructure partnership that Trump and the GOP want to implement to Make America Great Again!
That story was this morning and now it is official:
Carillion collapsed on Monday when its banks pulled the plug, triggering Britain's biggest corporate failure in a decade and forcing the government to step in to guarantee public services from school meals to roadworks.
The 200-year-old business went into compulsory liquidation at 0600 GMT after costly contract delays and a slump in new business left it swamped by debt and pensions liabilities of at least 2.2 billion pounds ($3 billion).
Carillion is a global powerhouse:
Employing 43,000 people around the world, including 20,000 in Britain, Carillion has been fighting for survival since July, when it revealed it was losing cash on projects and had written down the value of its contract book by 845 million pounds.
With banks refusing in recent days to accept the latest restructuring plan, May's senior ministers met around the clock, under pressure from the Labour Party and unions not to use taxpayer money to prop up the failing company.
It seemed like a good idea at the time:
Britain began outsourcing public services in the late 1980s under Margaret Thatcher and enjoyed a boom period under Labour's Tony Blair and Gordon Brown. It is now the world's second-largest outsourcing market behind the United states.
The total impact is not yet known:
Rudi Klein, head of Britain's Specialist Engineering Contractors' Group, warned that the impact was likely to be felt by small contractors. He estimated Carillion had left a trail of 1.2 billion pounds in unpaid bills to thousands of small subcontractors.
Klein said the scale of the industry's exposure was not yet clear but he gave the examples of a small Northern Irish engineering contractor owed 150,000 pounds and a concrete frame manufacturer in northwest England owed 2 million pounds.
There are a half dozen additional stories with embedded links here: