20,000 jobs in the UK and a similar number of jobs abroad are under threat with the collapse of the giant construction company Carillion into compulsory liquidation with debts of over £1.5 billion.
One analyst described this bankruptcy as a ‘Lehman Brothers’ event not only for the British construction industry but for the entire privatisation programme of public services in the country.
Carillion is up to its corporate neck in every major privatisation and PFI (Private Finance Initiative) scheme. Apart from winning contracts to build major road and rail schemes, Carillion and the other PFI companies have been used to ‘outsource’ the building and running of schools, hospitals, prisons and motorways across Britain, earning them billions in profit and the justified description of ‘legal loan sharks’ of the public sector.
Their business model was simple, bid ridiculously low for contracts with no contingency plans for inevitable delays, borrow billions from the banks to finance these schemes, then sit back and pocket all the profits from piling on excessive costs to taxpayer for this work.
None of this came as a surprise, it has been clear to everyone since at least July last year that Carillion was going down the drain when it issued the first of three profit warnings. Not that this stopped the Tory government from keeping rewarding Carillion with public sector contracts worth billions.
This weekend, the banks finally called in their debts when it was obvious Carillion was completely bankrupt and unable to pay even the interest on its huge loans. The banks are assured that as privileged creditors they will be first in line to getting their money back from the sale of Carillion’s assets, while the bosses will walk away with their massive million pound bonuses intact.
Carillion workers will get precisely nothing except seeing their jobs destroyed and their pension fund, which has a massive hole of over £600 million, transferred to the public sector with their pensions reduced by 20%.
The working class will have to pick up the bill as all the services previously run by Carillion, from school and hospital meals through to NHS and prison buildings, will have to be financed by taxation, increases the Tories will claw back through further austerity cuts.
Rehana Azam, the national secretary of the GMB union, said: ‘There is no place for private companies who answer to shareholders, not patients, parents and service users in our public services.’
In May 2016 GMB won £5.4m in compensation for 116 GMB members who were blacklisted by construction companies including Carillion, Balfour Beatty and Skanska UK. GMB general secretary Tim Roache said that the government ‘must act right now and bring Carillion contracts back into public ownership. That is the only way to safeguard the jobs and services this mess has put at risk.’
It is not, however, a question of just bringing Carillion contracts back into public ownership, the unions must now fight to ensure that not a single job is lost and organise a campaign of strike action and occupations to ensure that none of these services are closed down and that every single PFI contract is ripped up and the privateers driven out of the public sector along with the Tory government.
The trade unions must immediately call a general strike to bring down this Tory government and go forward to a workers government that will nationalise without compensation every one of these companies, along with the banks that have reaped vast profits out of ‘loan sharking’ off public services.
The collapse of Carillion is indeed a Lehman Brothers moment for British capitalism, just as that collapse spread across the world banking system and brought the banks to the point of collapse with the working class being forced to pick up the bill through austerity cuts, so Carillion marks a decisive stage of the collapse of the entire bankrupt British capitalist system.
Workers will no longer accept picking up the bill for capitalism’s crisis and are rapidly reaching the conclusion that the time has come to end capitalism for good through socialist revolution.