Jos Creese 16 January 2018

Carillion collapse: What next for public services?

The failure of Carillion raises many questions. The obvious ones are how it happened at all, since these sorts of collapses typically are long in the gestation, if anyone seeks the warning signs.

So, what were the government officials doing regarding due diligence and routine supplier monitoring as they invested taxpayer's money? Where were the auditors and why did they miss this (if they did)? Was it the range and reach of services across so many parts of the public sector that created a 'blind spot'? What lessons can be learned, especially in managing public/private service risks - and given the take payer usually has pay both ways when these sorts of failures impact public service delivery (look at PFI).

Allegedly, some of the smarter money apparently moved out of Carillion a while ago - if this is true, what did they know that others didn’t?

But there is a more serious question regarding the relationship between public and private sector in a digital age - protecting essential jobs and services as well as money.

In the wake of Carillion, many of the services and contracts provisioned by Carillion will be passed to others of run, at least for time. No doubt there will be costs of this, but at the same time, continuity and risk will be examined more closely, whether the services are delivered in-house of externally.

How can we determine the best model in the future, rather than trusting without apparent question old-style outsourcing contracts? Notably, many public service organisations are become more commercial, with successful shared service partnerships now spanning multiple public services. These are proving sustainable, and promise lower costs (marketing, salaries, profit, corporate overheads), greater flexibility/agility (not tied to contracts designed for a different age), greater resilience (or at least self-insurance) and ore transparency (democratic scrutiny and public-sector transparency).

It is also arguable they have a stronger public service ethos, with a greater commitment to service outcomes over shareholder value.

This is not an argument for insourcing or nationalisation. But it may be time to consider the service model that failed with Carillion and reassess the boundaries and expectations from public/private partnerships and a rebalancing of risk, cost and ownership.

Jos Creese is an independent digital analyst and consultant

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