Carillion and Public Sector Outsourcing

Chris Stephens Excerpts

Wednesday 24th January 2018 Commons Chamber

[Jon Trickett]

My hon. Friend is absolutely correct. In the 16 years up to 2016, the dividends paid to shareholders increased every single year, while the pension pot and the conditions of work and the pay that the workers received was diminishing. By the way, Mr Deputy Speaker, I met a subcontractor of Carillion the other day, who told me that the company had a policy of not paying anybody in December, because on 1 January the bank wanted to look and see how much liquidity was left. Is that not shocking?

Maybe the Government’s devotion to outsourcing is the real reason why they have failed so monumentally in relation to Carillion. They had a blind assumption—and still have—that contracting out works efficiently, and that the market always knows best, which we know is not the case. If they do not learn from the repeated failures of outsourcing, there will be another Carillion around the corner, and then another and another. One needs only to look at companies such as Interserve and Mitie, which deliver public services, to see how fragile some of these Government contractors are.

[Chris Stephens (Glasgow South West) (SNP)]

rose—

[Jon Trickett]

I could stand here and reel off a long list of outsourcing companies that have been guilty of fraud, tax avoidance, blacklisting, failure to pay contractors, and even, shockingly, billing the taxpayer for tagging people who had died. They have presided over, and have been vehemently committed to, a failed and failing ideological project. That is my charge today.

My opposite number, who I am pleased to see in his place—the Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster—has personally shown lots of enthusiasm for handing out Government contracts—

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[Chris Stephens]

I thank the Minister for explaining the process. Given the concerns raised by the shadow Minister, will he confirm that there is no testing of whether a company is engaging, or has engaged, in the practice of blacklisting?

[Mr Lidington]

The issue of blacklisting is itself a matter of debate internationally about how the various criteria for blacklists are being drawn up. We have a set of criteria that are published in respect of each and every bid that is submitted for a contract being let out to the private sector.

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[Chris Stephens (Glasgow South West) (SNP)]

I am delighted to see you back in the Chair, Mr Deputy Speaker.

We heard from the Minister for the Cabinet Office a lengthy justification of outsourcing, but it was rather diminished by some of his colleagues—right-wing ideologues lecturing the rest of us on ideology—who claimed that, with outsourcing, risk is transferred from the public sector to the private sector. The current situation of Carillion shows that that is just complete and utter nonsense; the risk always remains with the public sector. As I remember as a trade union negotiator, the problems of outsourcing also include a reduction in workers’ wages, and not having a comparable pension scheme because the new employer would put less into it, so there are all sorts of issues. There is, however, a general principle. The Department for Work and Pensions has issued a contract to a company, Interserve, for cleaning services, but its current financial adviser is the same individual who was advising Monarch Airlines, so what chance have we got with some of these Government contracts?

I want to raise again the concerns expressed by the shadow Minister in relation to handing over contracts to blacklisters. In their procurement contracts, the devolved Administrations have specific rules that I think the Westminster Government should also apply: there should be an apology from companies participating in the blacklisting; they should take remedial action; and they should provide compensation to the workers who were blacklisted.

I think there is a sensible solution to the current Carillion crisis that would help the existing workforce. It can be found in the Workers (Definition and Rights) Bill, which was published last week and is available in all good Vote Offices. It is a visionary Bill, if I may say so, because we need to have the principle that where a subcontractor absconds or ceases trading, the principal contractor is then responsible for the wages of the subcontractor’s workers, including

“any fee, bonus, commission, sick pay, maternity pay, holiday pay, redundancy pay”

or any other payment. I hope the Government will look carefully at clause 3 of the Bill, and introduce emergency legislation to protect the workers of Carillion and to ensure that when subcontractors are caught up in such a situation, the principal contractor must pick up the tab.