Carillion

The first of two stories picking over the corpses of failed big public service contract businesses – the next one follows this article directly. It seems to me that we are reaching the nadir of this sort of way of doing things in the public sector…

The collapse of Carillion at the start of this year was “almost inevitable” given the model of outsourced service delivery pursued by successive governments, MPs said today.

Issuing the final report of the joint inquiry into Carillion, the business and work and pensions committees were highly critical of government business policy, the company’s directors, regulators and the accountancy and audit professions.

Work and pensions committee chair Frank Field said Carillion’s collapse was “a disgraceful example of how much of our capitalism is allowed to operate, waved through by a cosy club of auditors, conflicted at every turn”.

He added: “Government urgently needs to come to Parliament with radical reforms to our creaking system of corporate accountability.”

The government was also urged to immediately review the Crown Representative system. Crown Representatives provide an interface and single point of focus between the government and key suppliers but the report slammed them as “semi-professional and part-time”, and failing to provide sufficient warning of risks in a key strategic supplier.

But the report’s harshest words were reserved for the directors of Carillion who were labelled as greedy and complacent. Executive bonuses were paid out every year, even as the company began to unravel.