Employees transferred in prison and defence contracts – but more than 1,000 ex-staff have lost jobs
More than 4,400 staff who worked for collapsed government contractor Carillion will keep their jobs, the Insolvency Service has said, after new companies were found to provide prison maintenance and services for military bases.
The latest update takes the total number of Carillion jobs that have been saved since the company’s failure last month to 6,668, more than a third of its 19,500-strong workforce.
Analysts and pundits have been too quick to agree that recent sell-offs are nothing more than a reset
A storm in a teacup? A healthy correction? Have investors, or at least those fooled by two years of unnatural calm in stock markets, merely been handed an overdue lesson that share prices can fall suddenly as well as rise smoothly? Will we be sleeping soundly again by the end of the week?
The not-much-to-worry-about school has history on its side. Most stock market wobbles do not develop into something worse. There have been only three serious stock market plunges in the last 30 years or so (1987, the 2000-01 bursting of the dotcom bubble and the banking crash of 2008) but many more corrections along the way that appear as minor deviations on today’s charts.
The current outsourcing pattern is commercially unsustainable. It is time for a wider rebalancing of public and private provision of essential services
When the chief executive of a business declares its operations to be “far too complex”, investors are naturally alarmed and customers concerned. In the case of Capita, the ultimate customer is the taxpayer, since the group specialises in services outsourced from Whitehall, devolved administrations, local government, the NHS and other public sector bodies. Wednesday’s profit warning by Jonathan Lewis, Capita’s CEO, is all the more alarming since it comes so soon after the collapse of Carillion, whose over-complex business also relied heavily on public sector contracts. But Capita is not, yet, the new Carillion. Its share price has tanked, but it is still able to raise money. Mr Lewis is airing dirty financial laundry now because, being new to the job, he can signal change and blame troubles on the old management.
So business as usual? Not quite. Given the scale of public sector vulnerability, the Carillion case takes business as usual off the menu. This is a political matter more than a commercial one. Businesses operate under the conditions that are set for them by governments and, where outsourcing is concerned, the market only exists by virtue of public procurement. That brings special responsibilities and unique consequences for failure. Most voters do not dwell on ownership structures behind public services – until they go wrong. There is higher awareness of the private sector’s role in the NHS, providing buildings as well as clerical and clinical tasks. That is because the health service is a symbol of universal care bought with general taxation. Fear of its cannibalisation for profit animates great political passions.
Despite late rescue bid, administrators prepare to take action, prompting fears for 43,000 jobs, major projects and crucial public services
Construction firm Carillion is hoping for an eleventh-hour rescue to save it from the brink of collapse, amid fears for the future of a host of major government projects and day-to-day services, from schools to hospitals, prisons and the army.
The Cabinet Office hosted emergency talks on Sunday aimed at mapping out a future for a company that employs 43,000 people – including nearly 20,000 in the UK – but the meeting broke up without a rescue deal being announced.