IT IS almost exactly one year since the dramatic collapse into bankruptcy and compulsory liquidation of the giant outsourcing and construction company Carillion.
At the time it was described by analysts as a ‘Lehman Brothers’ event for the British construction industry and the entire Tory privatisation programme of handing public services over to be looted by these massive private companies.
One year on, and this prediction is becoming a reality. Carillion which went bust with debts of over £1.5 billion and was unable to even pay the interest on these loans to the banks, was just the beginning and was swiftly followed by the rest of these outsourcing bandits crashing into bankruptcy.
Ever since Carillion’s bankruptcy the speculators have been running a mile from buying shares in these outsourcing companies. Over £4 billion has been wiped off the value of shares in the biggest of these companies with Interserve, G4S, Kier, Capita and Mittie seeing their market value fall by 40% as investors wake up to the fact that these companies are being propped up exclusively by piling up debt.
Interserve, which was Carillion’s biggest competitor, in the rush to gobble up lucrative government privatisations, lost more than 85% of its share value. The company which specialises in construction and facilities management, and employs 25,000 workers in the UK, reported a loss of £6 million in the first six months of 2018 and is reported as needing to raise £500 million in order to avoid collapse under a debt mountain of £650 million.
Interserve has been forced to beg its lenders to swap their debt for equity in the company along with seeking the agreement of the banks to defer a debt repayment due in February 2019 until April. If this last minute deal to avoid immediate collapse is agreed by its shareholders, it will wipe out all of their investments and hand complete control of the company over to the banks. Interserve is not alone as we have seen.
Kier, another building outsourcing company, is desperately trying to raise £250 million while shares in Capita, the outsourcing company which runs government contracts throughout the NHS and public sector, plummeted by over a third when it admitted to plans for raising £700 million in May this year.
Capita shares were priced at over £10 a share, now they are below £1.50 as the rout continues throughout the privatisation bandwagon that these outsourcing companies feasted upon. Interserve’s share fall was even more dramatic, falling from £1 a share last year to 6.5p this month.
When the banks finally pulled the plug on Carillion a year ago all the services it ran, from school and hospital meals through the NHS and prison buildings, had to be bailed out by the Tories using taxpayers money, money the Tories were determined would be clawed back through further austerity cuts.
Thousands of Carillion workers faced losing their jobs while they discovered that their pension fund had been systematically looted for years by the company while it paid out millions to shareholders and its bosses leaving the working class to pick up the bill. At the same time these bosses were allowed to slink away with their pockets stuffed with the millions they had ‘stolen’ from the working class courtesy of the entire privatisation bonanza gifted them by the Tories.
The collapse of the rest of these outsourcing giants who are facing imminent bankruptcy will dwarf that of Carillion in terms of jobs and the catastrophic effect on public services.
There is only one solution for workers to this crisis, there must be no repeat of the Carillion collapse where the bosses just walked away leaving the working class to pay for their crisis. Instead, the working class must demand that the TUC organise immediate allout strike action to put an end to privatisation and outsourcing for good by bringing down this Tory government and going forward to a workers government.
A workers government that will expropriate the privateers and the bankers and place industry and the banks under the direct management and control of the working class under a planned socialist economy.