Regular commentator Andy Crow made an excellent point in a comment on the blog this morning, saying in response to a suggestion that the component elements of Carillion be turned into worker cooperatives:
I guess the answer is at least twofold:
1) This government would be unlikely to support or facilitate the idea because it's contrary to everything they seem to believe in. Anathema even.
2) The process of liquidation is about recouping any financial capital. The human capital is unlikely to be a consideration within its brief.
His first point is right.
His second is what interested me though, and is incredibly pertinent.
It is perfectly obvious that Carillion is financially bust. But by ‘doing a Lehman' it is entirely possible that the government has missed the point for the economy as a whole here. The fact is that Carillion was working with the wrong incentives, in the wrong structure and to the wrong price and for the wrong reasons as a consequnce and yet (and that is a very big ‘and yet') 20,000 people were working in the UK, largely for or on behalf of public services.
Many of thsoe people could, and probably should, be working in house. I have never seen a reason why a school cannot run its own repairs. Nor a council school catering. Or a hospital its own cleaning. All have scale to do that. It is only labour exploitation that supposedly justified outsourcing and the consequnces of that are all too obvious now and need to end.
What is important is that the skills that run those services are not lost now.
And that is also vitally true of Carillion's construction arm and its work on hospitals and other projects. No doubt Carillion's systems need improvement since their focus has been inappropriate, but the fact is that the economy needs the people who work on those projects to still be working on them. And we cannot afford to lose them or the capital invested in what they know of each other.
That organisation and human capital could be lost now with the collapse of Carillion. That imposes a real cost on the UK. It's a cost we can ill afford when there is so much that the UK needs to be done to transform its economy. But no one in government thinks about these things.
That's because they follow zombie economics.
Thanks to Andy for thinking differently.
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This is so true and really rather well put! I am looking at the total destruction and scattering of a team of trainers who are making a profit for the main company and not an inconsiderable one. Once this company is dissolved at the end of the month all that is good here will be lost forever
Good luck
I hope you come out of this OK
“That’s because they follow zombie economics.” Pretty good article on the same in the Guradian today:
https://www.theguardian.com/commentisfree/2018/jan/17/britain-zombie-elite-politicians-economy
Adding to this: the BoE came out with a working paper on climate change & the economy – very much zombie economics – again.
https://www.bankofengland.co.uk/working-paper/2018/climate-change-and-the-macro-economy-a-critical-review
I’m not so sure that the collapse of Carillion means that the people who work for them or their skills will be lost to the UK economy. I haven’t heard that any of them have upped sticks and moved to France already although it is conceivable that many might return to Poland, from whence they came, unless that is, competitor companies take on the local government, prisons, schools and hospital contracts that used to be run by Carillion and will need to hire people who can actually deliver those services.
It would not be beyond the wit of anyone to put these two parties together or even encourage or incentivise new bidders to take on ex-Carillion workers. It is unlikely in any case that any companies bidding for the contracts actually have spare bodies lying around idle ready to take on the work at the drop of a hat. God-forbid, but even some of Carillion’s Managers might even be employable by a company taking over the contracts. Where there is a demand, people will supply the labour. The work itself hasn’t disappeared after all.
Respectfully, yoiu gave your prejudices away when you mentioned Poland
Get real
And get real about rates of change
Your comment is not credible as you are not, not least because you wholly missed the point of what I was saying
Yes someone, various companies or agencies will take Carillion’s place but that will not necessary compensate those that have been damaged directly or indirectly by the disruption, upheaval, unpaid debts, unpaid wages and unpaid sub-contracts. Will it?
If we had a serious, functioning government instead of an unserious, ideologically driven , blinkered one, a major problem like this could be solved at a stroke . It could takeover the company ( for a nominal sum and appoint a CEO and a management team to continue to run the business which is more or less what happened ( albeit substantially in favour of the existing management – wrongly ) in the case of RBS where the government was the major shareholder.
I am bemused that a CVA with the aim of wiping out equity and some bonds with a haircut for creditors could not have been arranged to do this
And if not all did not permit it why is law not being changed?
The Guardian today has an article by Aditya Chakroborrty entitled “Britain is being stalked by a zombie elite.” It demonstrates the history of politicians recycling the same old failed ideas of Neoliberalism since the Thatcher revolution. All around us we see examples of State support for broken privatisations (East Coast,Carrilion etc.) and yet there is confusion in the minds of the public especially when May can correctly state that one third of these contracts were established by Labour. This morning I spoke to someone in the Gym who was irate at the Carilion disaster but who was sick of politicians and he wished that Farage was in charge!!
The difficulty for Labour is that half of the party is still pursuing this Zombie politics and it is only those of the left who can suggest an alternative. It is vital that Labour begins to assert a coherent vision for the future which attracts the many angry and confused people who are losing faith in democracy.
When employees suffer as a result of the collapse of large privately-owned business, Neo-liberals see it as unavoidable (hence acceptable) ‘collateral damage’. I fear this view is widely accepted by the ‘unmovable 40%’ mentioned earlier. Deceptively, though, they shed crocodile tears.
Slightly off-topic, but this recent clip from the US further highlights the fundamental philosophical differences between a Neo-liberal view of the economy and a people-orientated alternative – https://www.youtube.com/watch?v=r8Dkph6FR_Q.
Seems like a war of attrition is being waged on both sides of the Pond, with the Neo-libs winning battles thus far. But there’s a very long way to go. Our 2022 GE will be a good indicator as to how the combattants are faring.
I agree re your analysis of ‘collateral damage’
It might also be called ‘selective indifference’
Or ‘I’m all right Jack; sod you’
‘Deceptively, though, they shed crocodile tears.’
This is as far as you’ll get with the Tories: /www.theguardian.com/society/video/2017/dec/06/heidi-allen-mp-tears-frank-field-impact-of-universal-credit-video
However:
How Heidi Allen voted on Welfare and Benefits #
Generally voted against paying higher benefits over longer periods for those unable to work due to illness or disability Show votes
2 votes for, 4 votes against, 2 absences, between 2015—2016
Generally voted for a reduction in spending on welfare benefits
By extension another form of destruction of ‘human capital’ where not even crocodile tears are spent:
SNP MP David Linden has said that the prime minister’s refusal to apologies for the impact her government’s welfare policies are having on a local constituent “exposes a complete lack of compassion.”
David Linden’s question to Theresa May on the roll-out of Universal Credit centred on the case of a Glasgow woman facing homelessness after being wrongly sanctioned for over 9 months in total for failing to attend Jobcentre meetings, despite being found too ill by her doctor.
Read more at http://www.welfareweekly.com/pm-refuses-to-apologise-over-universal-credit-misery/#0fet5U4EqtxAqfQI.99
With respect to your comments about taking work back in house. As far as the railways are concerned, I see it as an absolute necessity. I speak from experience, and I have no doubt that Carillion, Amey, et al are/were all reading from the same song sheet. A while ago, (and I change the locations slightly to avoid an acquaintance any embarrassment – relative distances are similar) I drove a friend who was to be safety officer on an overnight rail survey from Carlisle to Bristol where we were joined by 2 technicians from Edinburgh who were to isolate the overheads, and the engineer in charge from Portsmouth. Those are the efficiencies you get from privatisation. As an agency worker, he was on £230/day plus exes, agency got £60-70/ day and the costs were charged onto Network Rail for, I don’t know what – My friend thinks double. As you suggest, much more could be achieved by direct employment.
Thanks
Here’s an interesting take on what was actually going on at Carillon (and many other companies). The key feature is the temporal analysis – I’d be interested to know what you make of this as an accountant. My own take is that this is an incredibly risky business model, for all of the reasons given but above all because of the inherent uncertainty of the future and the underlying attempt to assume greater certainty of and knowledge about that future than is actually possible.
https://www.opendemocracy.net/neweconomics/time-fragile-temporality-carillions-accumulation-model/
Great article
A good researcher – I kno Adam
From a good university
I hope all your readers have read the classic of modern British literature by Robert Tressell.
‘The Ragged-Trousered Philanthropists’ A good critic of Zombie economics!!!
I read it again a couple of years ago