Carillion and Public Sector Outsourcing — House of Commons, 2018-01-24
Topic: Labor
David Roy Lidington (Conservative, Centre-right): Thank you, Madam Deputy Speaker. I will try to make progress Her Majesty’s Revenue and Customs will provide practical advice and guidance to those affected through its Business Payment Support Service. That may include help such as agreeing instalment arrangements, suspending any debt collection proceedings and reducing payments on account I should say a brief word about the concerns of members of Carillion’s defined-benefit pension schemes who, understandably, are seriously worried at this time. Existing pensioners will continue to receive their pensions at agreed levels, but the significant funding deficit in Carillion funds will mean that some future pensioners will see their pensions reduced. At present, seven Carillon schemes, covering 6,000 members, have moved to the Pension Protection Fund assessment period, which occurs automatically when a sponsoring employer becomes insolvent. The remaining 21,000 members are in schemes that have at least one sponsor not in insolvency and are therefore not in the PPF. When a scheme moves into the PPF, the worst-case scenario is that the fund ensures that all pensions in payment continue to be paid at 100% of their value, and people who have benefits in such schemes for the future will receive those benefits at 90%, at least, of their expected value, subject to an overall ceiling on the amount that any individual can receive from a pension. The Prime Minister restated on Sunday that the Government will shortly consult on tough new rules to tackle the behaviour of executives who try to line their own pockets by putting their workers’ pensions at risk—behaviour that she rightly labelled "an unacceptable abuse that we will end" The official receiver has also taken immediate action to stop severance and bonus payments to former Carillion directors My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has written to the Insolvency Service and the official receiver asking that their statutory investigation into the conduct of Carillion’s directors is fast-tracked and extended in scope to include previous directors. He has also asked the Financial Reporting Council to conduct an investigation into the preparation of Carillion’s accounts past and present as well as the conduct of the company’s auditors. I can assure the House that no payments have been made to board directors or the former directors who had severance agreements since the date of liquidation. Directors with such severance agreements became unsecured creditors from the moment of liquidation Finally, in his opening remarks the hon. Member for Hemsworth touched—probably more than touched—on the overall questions about the outsourcing policy of this and other Governments. It is worth pointing out that outsourcing, whether in construction or the provision of services, is something that successive Governments—Labour, coalition or Conservative—have been doing since the 1990s. The services provided to the public sector by private companies include IT, back-office services, facilities management and other business services, such as running call centres. In many cases, those services have now been delivered by private sector companies for 10 or 20 years, and many have built up specialist expertise, skilled staff and investment to deliver public sector contracts This is a matter not just of cost, but of quality and innovation. If we look at a project such as Crossrail—the largest infrastructure project in Europe—that railway will open on time and on budget later this year. To deliver that project on time and within budget, Network Rail and Transport for London work with a huge range of private sector companies—including Costain, BAM Nuttall, Balfour Beatty, Morgan Sindall and others—and use their specialist expertise, which is something, frankly, that civil servants are not trained to have I could list a long catalogue of examples of such successful use of private sector companies to deliver capital investment into our hospitals, schools and transport infrastructure and successfully to deliver the provision of public services in all aspects of the public sector. What I found to be such a pity about the hon. Gentleman’s contribution was that he resorted to ideology, instead of looking at the people—our constituents—who actually use the services and who benefit from the better value for money and innovative quality that private sector contractors are able to bring, and have brought successfully, to that work Not only that, but in an enchanting display, the hon. Gentleman disavowed his party’s entire history of 13 years in government. Let us not forget that the majority of outsourcing in the NHS took place under the Labour Governments between 1997 and 2010, as part of an initiative that was championed, in particular, by the current Mayor of Greater Manchester. Let us look at what the Labour party has said since it left office. The shadow Communities and Local Government Secretary praised Carillion as an example of "good public procurement practice", and the shadow Foreign Secretary praised it for offering apprenticeships to her constituents. The shadow Housing Secretary has said that PFI helps to deliver better and more cost-effective public services, and the shadow International Trade Secretary described it as "a staggering investment in the future of…children and…excellence".—[Official Report, 15 November 2002; Vol. 394, c. 308.] The shadow Northern Ireland Secretary said PFI provided "good value for money". [Hon. Members: "When?"] It is very interesting that Labour Members feel they have to conform with the new dear leadership that the hon. Member for Hemsworth wanted to celebrate, but they should have the courage of the convictions they expressed when in office and since about the value of a proper constructive partnership between the public and private sectors in the interests of the constituents we are sent here to represent The shadow Health Secretary says that NHS experts accept that only a "handful" of PFI contracts are causing hospital trusts a significant problem. Labour council leaders in Manchester, Birmingham and Hounslow have praised public-private partnerships for delivering growth and urban regeneration in their areas. For all the denunciations of Carillion, one third of the contracts that the state sector still had with it at the time of its liquidation were awarded by the Labour Governments of the early 2000s—Labour Governments in which the hon. Member for Hemsworth served as Gordon Brown’s right-hand man in No. 10 when that outsourcing work was at its zenith The Government are committed to ensuring that the public sector continues to benefit from the best of private sector innovation and skills. We do not put ideology first; we put the service user and the citizen first. That is the policy that the Government are committed to and which we intend to continue.