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.
Workers in Wakefield and Mansfield worst affected as tech advances risk widening north-south divide
Workers in Mansfield, Sunderland and Wakefield are at the highest risk of having their jobs taken by machines, according to a report warning that automation stands to further widen the north-south divide.
Outside of the south of England, one in four jobs are at risk of being replaced by advances in technology – much higher than the 18% average for wealthier locations closer to London. Struggling towns and cities in the north and the Midlands are most exposed. A total of 3.6m UK jobs could be replaced by machines.
Democracies will fall under the spell of populists like Donald Trump if they fail to deal with the fallout of globalisation
The rich, as F Scott Fitzgerald noted, “are different from you and me”. Their wealth, he wrote, makes them “cynical where we are trustful” and their affluence makes them think they are “better than we are”. These words ring truest among the billionaires and corporate executives flocking to the Swiss ski resort of Davos this week. The highs recorded by stockmarkets, the tremendous monopoly power of tech titans and spikes in commodity prices reassure the rich cosmocratic class that they have weathered the storm of the financial crisis. The moguls can talk safely about inequality and poverty. But they will do little about it because they do not think their best interests are aligned with citizens. This is a mistake of historic proportions.
Since 2015, Oxfam calculates, the richest 1% have owned more wealth than the rest of the planet. The very wealthy think they no longer share a common fate with the poor. Whatever the warm words at Davos, no company bosses will put their hands up to the fact they play one country against another in order to avoid taxes; no firm will be honest about their attempts to stymie trade unions or about how they lobby against government regulation on labour, environment or privacy that tilts the balance of power away from them and towards the public. The largest western corporations and banks now roam the globe freely. As memories of the financial crisis recede, they are going back to the myth that they are no longer dependent on national publics or governments. Lobbyists for the corporate world claim that markets are on autopilot, that government is a nuisance best avoided.
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.
Though we’ve seen the awful cost of government ideology, this bailout may be its biggest outrage yet
In 1787, a splendid metaphor was born. Catherine the Great of Russia set out on a cruise along the River Dnieper to survey a new colony. To wow the empress, her lover, Prince Gregory Potemkin, organised fake villages along the bank and tricked out his men as honest serfs. As Catherine’s boat floated by, the serfs stood and cheered – then stripped off, dismantled their settlements and ran downstream to do it all over again. And so the world was gifted the Potemkin village – a byword for ruling-class deceit and disinformation. While the Kremlin has cornered the market in Potemkinism, dictators everywhere like to indulge.
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