Carillion’s collapse in UK and the East Coast bailout: What would ending the “Private Financial Initiative rip-off” entail?

 

Carillion’s collapse in UK and the East Coast bailout: What would ending the “Private Financial Initiative rip-off” entail?

By
Jean Shaoul

18 January 2018

In a YouTube video, Labour leader Jeremy Corbyn described the collapse of Carillion, the UK’s second largest construction company, as a “watershed moment,” a signal it is “time to put an end to the rip-off privatisation policies that have done serious damage to our public services and fleeced the public of billions of pounds.”

Opposing the “outsource-first dogma” in the public sector, he cites the government bailout of East Coast Main Line (ECML) rail franchise last November as proof that it is “time we took back control” by ending the “PFI [Private Finance Initiative] rip-off.” Corbyn also advocates taking the rail services back into public ownership.

Corbyn is tapping into the anger generated by the collapse of Carillion and the government’s extension of the corporate welfare safety net to protect billionaire Richard Branson’s Virgin Group while essential services such as the National Health Service are being gutted. He noted in his video “the scandal of the NHS being sued by private companies like Virgin after losing a contract bid.”

But this points to a fundamental question that workers must address: If Corbyn were serious about such a course of action what would it mean? After all, hundreds of billions in investments are at stake, so any such moves would be bitterly resisted by those who stand to lose out.

The ECML bailout alone involved the government agreeing to shoulder losses of £2 billion (US $2.76 billion) by terminating the franchise between London, Leeds, Newcastle and Edinburgh operated by Virgin Trains East Coast (VTEC), a joint venture with Stagecoach, three years…

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