Car­il­lion is no one-off scan­dal. There are many more to come

The Guardian - Journal - - Front page - Owen Jones

Car­il­lion is no iso­lated fail­ure, no fluke, no aber­ra­tion. It is an­other symp­tom of a de­cay­ing so­cial order that is anti-demo­cratic, in­ef­fi­cient and places profit ahead of peo­ple’s needs, as­pi­ra­tions and even lives. That so­cial order is ne­olib­er­al­ism, which rolls back the pub­lic sphere ev­ery­where in favour of the pri­vate sec­tor, which slashes taxes on big cor­po­ra­tions and wealthy peo­ple, and which ob­ses­sively dereg­u­lates.

“A story of reck­less­ness, hubris and greed” is the judg­ment of MPs on two se­lect com­mit­tees, pub­lished yes­ter­day, on Car­il­lion; it would be as a good an epi­taph for ne­olib­er­al­ism as any. The busi­ness model of a com­pany that built roads and hos­pi­tals, served chil­dren school meals and pro­vided de­fence ac­com­mo­da­tion was “a re­lent­less dash for cash”, the MPs de­clared. How­ever prof­itable, it “in­creased its div­i­dend ev­ery year, come what may”. Their ac­counts “were sys­tem­at­i­cally ma­nip­u­lated”. As the com­pany be­gan col­laps­ing, “the board was con­cerned with in­creas­ing and pro­tect­ing gen­er­ous ex­ec­u­tive bonuses”.

Ap­pro­pri­ately enough, Car­il­lion chair Philip Green ad­vised both David Cameron and Theresa May on “cor­po­rate re­spon­si­bil­ity”. Reg­u­la­tors were tooth­less. The “big four” ac­count­ing firms acted as a “cosy” club, ap­prov­ing “fan­tas­ti­cal fig­ures”, fail­ing to iden­tify or sim­ply ig­nor­ing cat­a­strophic in­ter­nal prob­lems. They pock­eted vast sums of money in ex­change for grant­ing a dis­as­trous tax­payer-fed com­pany their seals of re­spectabil­ity. “Car­il­lion could hap­pen again, and soon,” the MPs con­cluded.

Damn right it could. The whole sys­tem of de­liv­er­ing es­sen­tial pub­lic ser­vices through com­pa­nies driven, by def­i­ni­tion, for profit guar­an­tees that it will. Ac­cord­ing to Na­tional Au­dit Of­fice fig­ures from 2016, the gov­ern­ment spends around £225bn on pri­vate and vol­un­tary providers – al­most 30% of all gov­ern­ment ex­pen­di­ture. It is worth not­ing the wider role of the big four ac­count­ing firms. They are sec­onded to gov­ern­ment, help draw up the tax laws, then help their clients avoid the very laws they have helped to de­sign.

Let us con­sider the mul­ti­ple fail­ures and scan­dals gen­er­ated by our ne­olib­eral so­cial order. On the day MPs pub­lished their re­port into Car­il­lion, the gov­ern­ment an­nounced the tem­po­rary re­na­tion­al­i­sa­tion of the East Coast rail ser­vice after its op­er­a­tors con­fessed they could no longer af­ford to run it. The ser­vice was last re­na­tion­alised in 2009 and, much to the em­bar­rass­ment of ne­olib­eral fa­nat­ics, proved a suc­cess story: it brought the ex­che­quer hun­dreds of mil­lions of pounds, was the most ef­fi­cient fran­chise, and had the best pas­sen­ger sat­is­fac­tion of any long-dis­tance fran­chise. After its pri­vati­sa­tion, its new man­agers abol­ished many cheap ad­vance tick­ets, de facto dou­bling some fares.

The whole pri­vately run rail sys­tem is an in­ef­fi­cient, fragmented mess, en­joy­ing far higher pub­lic sub­si­dies than Bri­tish Rail while of­fer­ing some of the most ex­pen­sive tick­ets in the west­ern world. The en­tire rail sys­tem, not just East Coast, should be na­tion­alised: but the Tories’ ne­olib­eral dogma is at war with com­mon sense, and they will flog the fran­chise off to an­other dis­as­trous gang of prof­i­teers as early as they can.

Re­mem­ber Serco, which was charged with the elec­tronic tag­ging of of­fend­ers. But Serco, driven by profit, over­charged the state more than £68m by in­voic­ing for the tag­ging of of­fend­ers who were not be­ing mon­i­tored, who were back be­hind bars, or were sim­ply dead. And then there was G4S, of­fered the Olympics se­cu­rity con­tract. When it failed in its du­ties, the state had to march to the res­cue in the shape of the Bri­tish army.

There are also scan­dals in lo­cal gov­ern­ment, the NHS and the care sec­tor. In 2011, South­ern Cross – owned by pri­vate eq­uity group Black­stone – col­lapsed. To­day, Four Sea­sons Health Care, the na­tion’s sec­ond big­gest provider of care homes for older peo­ple, is hun­dreds of mil­lions in debt and has closed or sold many homes. The pri­vate fi­nance ini­tia­tive, con­ceived un­der John Ma­jor and mas­sively ex­panded by New Labour, locks the gov­ern­ment into con­tracts of up to three decades with pri­vate com­pa­nies to build schools, hos­pi­tals and other in­fra­struc­ture. There are now 700 projects in op­er­a­tion that can cost up to 40% more than if they had been fi­nanced by gov­ern­ment bor­row­ing.

From wa­ter pri­vati­sa­tion – which has left English con­sumers pay­ing more than £2.3bn more a year than na­tion­al­i­sa­tion – to the bank­ing col­lapse, Car­il­lion is no iso­lated scan­dal. This is not the story of one com­pany’s ob­ses­sion with profit over pub­lic ser­vice, it is the in­evitable con­se­quence of a fun­da­men­tally rot­ten sys­tem that is anti-demo­cratic: the state is locked into gen­er­a­tion-long con­tracts, how­ever in­ef­fi­cient and poor they may be, while elected politi­cians have ab­di­cated many of their core pow­ers to the mar­ket.

Since the dawn of ne­olib­er­al­ism in the late 1970s, Bri­tain has suf­fered its worst three slumps of the post­war era, as well as lower growth that has been less eq­ui­tably dis­trib­uted. In the past decade, work­ers have suf­fered the worst squeeze in wages in modern times. All of this is in­ter­linked: from pri­vati­sa­tion to dereg­u­la­tion to the shift­ing of power from work­ers to bosses. Car­il­lion is a story of a sys­tem that favours profit, div­i­dends and share­hold­ers’ in­ter­ests over the com­mon good. That sys­tem is ne­olib­er­al­ism. Un­til we have a gov­ern­ment that rips up th­ese con­tracts and brings all th­ese pub­lic ser­vices back in-house, there will be many more Car­il­lions to come.

The state is locked into gen­er­a­tion-long con­tracts, while elected politi­cians ab­di­cate their core pow­ers to the mar­ket

JOE GIDDENS/PA

A Car­il­lion worker at Mid­land Metropoli­tan hos­pi­tal, Jan­uary 2018

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