Carillion collapse ‘an example of crisis in capitalism’

LIBERAL DEMOCRAT leader Sir Vince Cable has issued a call for wide-ranging reform of outsourcing, as it emerged that the collapse of Carillion is set to cost taxpayers about £150 million.

In a speech in London, Yorkborn Sir Vince named the failure of the outsourcing giant – alongside controversies involving companies ranging from Thames Water to Govia Thameslink and Persimmon – as an example of what he said was widely regarded as a “crisis in capitalism”.

He revealed that his party was considering the creation of a sovereign wealth fund – financed in part by taxes on corporations, wealth and financial transactions – to redistribute resources more fairly around society.

He called for tighter regulations on utilities, arguing that tech giants providing near-monopoly services such as Facebook, Google and Amazon should be regulated in a similar way to energy and water companies.

Utility companies should be subject to windfall taxes to claw back “excess profits”, he said, and share buybacks which inflate stock prices and bosses’ incomes at the cost of investment should be sharply restricted or banned.

Sir Vince said that in many cases, the outsourcing of public service provision, intended to improve performance and value for money, has instead proved more expensive for the taxpayer and profitable for the private sector.

But he rejected reject “misguided” calls following the collapse of Carillion to bring all contracted activity in-house and ban future outsourcing, arguing that there remain “good reasons for Government to bring in external expertise” in some areas.

Instead he issued a five-point plan for future contracts, including a ban on outsourcing where the profit motive should have no role, such as rehabilitation of offenders.