Carillion’s collapse raises awkward questions about contracting out

WHAT do high-speed railways, school lunches and army bases have in common? Perhaps not much, which may be one reason for the dramatic collapse of Carillion, a jack-of-all-trades contractor that did a bewildering array of work for Britain’s public sector. On January 15th the firm went into liquidation, casting doubt on the prospects of its 43,000 employees, 30,000 subcontractors and the fulfilment of government contracts stretching three decades into the future.The company’s fall is a story of commercial overreach and miscalculation (see ). But it is also the story of a political philosophy. Carillion exemplified a way of running the state that was pioneered under Margaret Thatcher and which went on to conquer the world. Where once governments provided public services, they now commission them from private companies. The idea is to subject moribund state monopolies to the competition and innovation of the market. Yet a string of failures in Britain, of which Carillion is the latest, means that the country which converted the world to “contracting out” risks becoming a cautionary tale. Voters are flirting with a Labour opposition that has already vowed to renationalise industries and now says it would bring many public contracts back in-house. The Carillion affair could mark the collapse not just of a company, but of an idea.