Size and competition – a perfect storm

Sir, – Derek Farmer is right to identify size as a factor in the collapse of facilities management and construction company Carillion, as well as the Royal Bank of Scotland et al, but there’s a further factor to these failures: lack of competition. This situation is aided and abetted by governments of every colour.

The best explanation is that governments find it more convenient to deal with a small number of big firms than a mass of small ones.

And government ministers probably prefer being seen with the heads of multinational corporations rather than small business bosses.

The result is a reduction in competition, sometimes to the point where the chosen behemoths start to believe in their own invulnerability. Pride before a fall. Also, competition begets improvement.

And if one competitor among many fails and dies, it’s relatively easy to deal with the pieces left behind, and for another business to step into the gap left by a failed company.

The lack of competitors is why nationalisation rarely works well.

The problem isn’t public ownership, as any businesses can get it right or get it wrong.

The problem is that fair competition is impossible once the state is one of the players. Dave Dempsey. 7 Carlingnose Park, North Queensferry.

A sign outside the Carillion headquarters in Wolverhampton, England.