Corporate UK is swinging into full self defence mode in the wake of the Carillion collapse. These headlines comes from an FT email this morning:
What are the messages?
First, that the directors took the right actions.
Then, that it was the governments fault they failed because they would neither meet them or appreciate that they had a duty to help.
Third, that privatisation does really work despite such hiccoughs.
And, fourth, the market's always there to lend a hand (even if, as I argue, not suitably).
It's all puff and nonsense, of course. And deeply political.
And if there is any doubt, note the FT editorial today:
One of the biggest PFI contractors has failed.
The NAO says PFI is the costly alternative for infrastructure financing.
But heaven's above, it's still the right thing to do according to the FT.
The message is clear: never, ever let evidence get in the way of good dogma is what s being said.
It's time the FT smelt the coffee and woke up to reality. The market has failed here. It's not a matter of dealing with it as a result: it's a matter of living with that fact. No amount of words from the FT will now change that.
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That FT. They are so silly.
Let’s look at those headlines from the perspective that most people will see them – which is browsing past and seeing the headline only:
“Carillion begged UK govt for £150m loan”
That really does not look good for Carillion, adds to the sense of their mismanagement and desperation, makes a mockery of “Private Funding” Initiative.
“Revealed: Another private company profiting from public sector”
“Revealed”? What’s this? Another PFI mob exploiting the public sector – another collapse? Its all too much.
“Banks set up funds to help businesses hit by Carillion”
Banks eh? Out of the frying pan and into the fire…
“No top ministers met Carillion in wake of profit alert”
Those Tories – every bit as useless as their bankster chums.
Well, that’s how some may be likely to see those headlines. Not everyone I know but still, I don’t think the FT thought all of those through.
No doubt written by Martin Wolf who said all this last week. They’re terrified of Corbyn and McDonnell. They did back Labour twice in elections but only when a safe pair of hands were in charge.
But all this is rubbish anyway. Carillion failed because of its private contracts not those with UK government.
Wolf is a faux progressive-more of a poacher turned gamekeeper like Adair Turner both of whom rode on the back of financialisation then switched horses after 2008 -or am I being unfair?
A bit
Not entirely though
Yes, every aspect of it is rubbish as you say. The attempted emphasis is all misleading and deflective but it kind of trips over itself (they protest too much). BTW I forgot one of those headlines:
“Carillion’s failure does not vindicate Corbyn”
Too defensive. It just reminds us that he was right about this and that photo looks like him standing there saying “I told you so”.
Um, its the Financial Times!
If I wrote for ‘Boxing News’ & began every article “its barbaric & senseless & should be banned” I suspect I’d not write many articles.
To my mind Martin Wolf is an exceptionally erudite, clear-sighted, & honest economist. He was one of the very few people to flag up warnings ahead of 2008. [So, yes Simon Cohen, you’re being both deeply unfair & ill-considered }He has an incredible gift for explaining economic issues in comprehensible terms & I can honestly say I’ve learnt more from MW than from anything I learnt at University (although that may reflect on me).
What do you want him to say? “My God, capitalism has failed! Marx was right all along! Sell the properties, we’re moving to Cuba?” He’s an economist, he writes for the FT!
MW will always provide a measured, intelligent, forensic analysis of the situation as it stands. He will not, quite rightly, make party political points. If that isn’t good enough for you then, fair play, don’t read the FT. I would find that sad because, in my experience, I’m one of the few left-wing people to read the FT & it is almost always worth reading.
It’s obvious from this blog that I read the FT extensively
I have high regard for MW
But he does make party political points in print and in person. He is no fan of Corbyn’s Labour
The mere fact that they are going into ‘ full self defence mode ‘ tells us that they know the game is up. PFI was a con from start to finish . It’s not as if the private sector didn’t have a major part in public provision hitherto . What makes PFI so very different ( apart from the obvious accounting trick ) is the locking in of the ‘ services ‘ which properly belong in the public realm and have become a type of rent seeking way into the future.
Well said, Richard. Hard to argue with.
https://www.opendemocracy.net/neweconomics/pfi-privatisation-national-accounting-rules-encourage-destructive-decisions-time-change/
I saw that FT headline this morning-which reeked of establishment ‘blitz defence.’ I didn’t bother reading it.
May’s comment that the Government was ‘customer’ of Carillion tells you all you need to know and an inversion of reality trumping Alice in Wonderland. The State reduced to customer rather than procurer is designed to forward the TINA concept that there is only ‘private money’.
Why couldn’t Corbyn adequately jump on this -Labour still hasn’t sharpened its tools.
I do find the inability of Labour to pounce irritating
Hmmm. I’ve been thinking about as well and thus far can only conclude that the Blair govt’s expansion of PFI’s puts Labour in a somewhat invidious position. Not entirely, of course, but somewhat.
Agreed
We are ‘the customers’, but unlike when we buy a car or mobile phone we were not given a choice and this is why the market solution fails.
Whenever, the scarcity is in skilled labour, e.g. healthcare, education, or engineering a road network, the market cannot offer sufficient choice to make a market solution viable.
The art is to optimise that skilled labour pool to deliver, which works best via cooperation not competition.
Agreed Charles
And precisely what the ‘market enthusiasts’ ignore
Charles Adams said “We are ‘the customers’”
I agree, and with your comments but look at what the Prime Minister said…
T May @PMQs 17/01/2018.
“We were a customer of Carillion, not the manager and that’s a very important difference.”
Is she really fit for office?
You have change “a” to “the” which is a massive improvement. We were the principle customer. We could tear apart the second sentence as well. Does she really think so little of her own office and of the power of the government. If she does she should move on.
Sorry this answer at PMQs really wound me up…
Ken,
T. May’s “customer” line is a weak, responsibility-dodging cop-out and everyone knows it. What’s more, it doesn’t work, not at all.
It is well-known fact in the corporate world that if you are a company, you have an arrangement with a customer, you’ve out-sourced a lot of your work and you’ve failed that customer in some way. You can’t skip-out by blaming the sub-contractor. The customer didn’t outsource the work, your company did and your company remains responsible.
That, for obvious reasons, is a widely accepted principle and everyone knows it.
[…] http://www.taxresearch.org.uk/Blog/2018/01/19/corporate-uk-is-swinging-into-full-self-defence-mode/#… […]
Socialist Newpaper, Sept 2011: “PFI was begun in the early 1990s by the then Tory government. It was attacked by Labour when in opposition, but then massively accelerated under Tony Blair and Gordon Brown’s governments.”
“Labour spokespersons such as Patricia Hewitt and Alan Milburn condemned such PFI projects as ‘backdoor privatisation’ when in opposition. In government, however, as health secretaries, they claimed it was the ‘only game in town’. And curiously, after government, they (and many other Labour ex-ministers) got lucrative private sector jobs and consultancies, many in the same areas where they had been ministers.”
“The Financial Times estimated in 2007 that, after ten years of New Labour, the total capital value of PFI contracts across the UK was £68 billion – but that the total which would be given to the private companies involved in those contracts, by the time they were finished, would be £215 billion!”
As the old Russian proverb goes: “Tories believe in the exploitation of man by man. Labour believes in the exact opposite.” I would like to be rid of both of them as neither are trustworthy and are only interested in power. Meanwhile the corporates continue to rip us off ably assisted by our politicians.
Richard Murphy claimed:
“The NAO says PFI is the costly alternative for infrastructure financing.”
And yet the NAO says nothing of the sort:
“Although we do not form a view on the value for money (VfM)…”
Did you read a different report? OR did you assume that your readers wouldn’t read the report to uncover the truth?
The NAO report quite clearly states that the cost of finance is higher
And very journalist and other reader, barring right wing trolls, reached the same conclusion on that
(Genuine) LOL
Bill,
Did you mean this report:
“Taxpayers to foot £200bn bill for PFI contracts — audit office
Cost of privately financing projects ‘can be 40% higher’ than using public money”
https://www.theguardian.com/politics/2018/jan/18/taxpayers-to-foot-200bn-bill-for-pfi-contracts-audit-office
this report:
“UK finance watchdog exposes lost PFI billions” – Financial Times
https://www.ft.com/content/db1b5c66-fba7-11e7-9b32-d7d59aace167
this report:
“Taxpayers to foot £200bn bill for PFI contracts,
National Audit Office finds ‘Carillion is just the latest example of how bad things go wrong when public services are left in the hand of profit-hungry companies’”
http://www.independent.co.uk/news/business/news/pfi-projects-200bn-private-contractors-national-audit-office-spending-watchdog-a8165106.html
this report:
“Little evidence that PFI contracts are good value, NAO report finds
There is little evidence that handing public contracts to private organisations offers value for money for taxpayers, according a National Audit Office report”
http://www.telegraph.co.uk/business/2018/01/18/little-evidence-pfi-contracts-good-value-nao-report-finds/
or this report?
“Breakingviews – Carillion mess puts Corbyn a step closer to power”
“The NAO’s report, published on Thursday, develops a theme it had already examined three years ago. The returns earned by debt and equity investors provided through the so-called Private Finance Initiative — in which Carillion was a key player — are 2 to 5 percentage points more expensive than the cost of government borrowing. This has been hiding in plain sight: Carillion’s cost of capital was around 9 percent, and the government’s finance costs are generally only around 3 per cent.
The only point of PFI — besides a sly ability for successive UK governments to keep essential public works off-balance sheet — was therefore operational efficiency. In the provision of hospitals, the NAO found these to be a mirage.
https://www.reuters.com/article/us-britain-projects-breakingviews/breakingviews-carillion-mess-puts-corbyn-a-step-closer-to-power-idUSKBN1F719G
or something else perhaps?
Did you read a different report? OR did you assume that R. Murphy’s readers wouldn’t read the reports that are available to them?
As if.
Marco
As I said this morning – finance and its trolls are out in force
Richard