Following the dramatic collapse of Carillion, UK Construction Week’s Nathan Garnett asks, did the UK’s second largest construction company slip through the cracks because the government were sidetracked by Brexit, and are private finance initiatives really devoid of risk?
The demise of Carillion this week seems to have come about like a slow motion train crash. Profit warnings and meetings with the cabinet office were taking place for weeks on end, and the cash situation at Carillion now appears to have been a concern within the government for months too. The fact that the government kept awarding contracts to Carillion can either be perceived as wishful thinking, that the new contracts would prop them up, or irresponsibility on the part of the government with public finances for a company that was never going to turn itself around.
It’s like trying to watch an intense drama on TV whilst reading a book at the same time, you can’t do both effectively. Perhaps the government’s attentions were all on Brexit and it’s repercussions for the whole economy, so much so that Carillion’s plight was symptomatic of having the mediocre TV drama on in the background – it got only a small amount of attention and the viewer lost track of the plot?
Whatever your viewpoint, to me it feels as though a juggernaut has been uncontrollably heading for the rocks for months and no one had the power to stop it.
Theresa May and others have been quick to say this shows that private finance initiatives are working, because Carillion took the brunt of the risk, not the tax payer. But what about all the sub-contractors who have to pick up the debris, and cut their cloth according to the new reality? They didn’t sign up for this kind of risk did they? And the 1,400 apprentices at Carillion who have chosen a career in construction, to add vital new skills to our depleted workforce, did they get warned they were taking on the risk?
The debate about outsourcing is now running amok. But lets make sure that doesn’t detract from the urgent situation the employees and apprentices and thousands of sub-contractors reliant on Carillion now find themselves.
Construction is a resilient, innovative sector, and we have already seen the sector respond to fix the multiple knock on effects. The Carillion story has to have a positive outcome, and hopefully that is about placing more value in the construction projects the country needs to avoid a repeat of this situation.
Nathan has worked in the event industry for 17 years and is currently responsible for UK Construction Week and 100% Optical; spearheading these launch events to become market leaders in their respective fields.