Collapse of U.K. construction giant rattles the government
The British government scrambled Monday to contain the damage as the country’s second largest construction firm was forced into liquidation after losing money on a series of contracts and racking up around $1.35 billion in debt.
The bankruptcy of the firm, Carillion, one of the government’s biggest contractors, threatens more than 19,000 jobs in Britain as well as the solvency of hundreds of subcontractors and smaller businesses.
A government-backed pension protection plan is taking over the company’s pension fund, which has an $800 million deficit that analysts say is likely to expand.
The spectacular collapse of what some call a “parastatal” company that has essentially helped the government run day-to-day operations — even managing school lunches and prisons — is raising questions about prominent contracts that continued to be awarded despite obvious red flags and warnings of lower-than-expected profits that began in earnest last summer.
More broadly, the company’s failure encapsulates a long-brewing debate in Britain over whether outsourcing public services to private enterprises is as effective as it has often been touted, and whether some contractors, like certain banks, have become too big to fail. After all, the government has had to step back in to keep public services that had been managed by Carillion running.
At: https://www.nytimes.com/2018/01/15/world/europe/carillion-bankruptcy-outsourcing-britain.html
Jeremy Corbyn: 'The collapse of Carillion is a watershed moment. It is time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced taxpayers of billions of pounds.'
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