Thousands of workers have been plunged into an uncertain future as outsourcing giant Interserve collapsed into administration last week.
It’s another sign of the destruction and theft caused by privatisation.
Interserve is responsible for delivering £2 billion worth of government contracts and has 45,000 workers in the UK and 88,000 globally.
It’s one of the biggest private contractors in Britain, and services stand on the edge of chaos.
The firm has contracts for services ranging from cleaning and providing school meals to managing big construction projects—and even running parts of the probation services.
Shareholders said no to a “rescue deal” on Friday last week. They rejected the plan by 59 percent because it would have cut the value of their shares.
Interserve is now under the control of administration firm EY and has been bought by a consortium of banks and hedge funds called Montana 1 Limited. This is set to soon be renamed as Interserve Group Limited.
Despite running into trouble because of huge debts, Interserve bosses claimed it was a “fundamentally a strong business”
“With a competitive financial platform in place we see significant opportunities ahead as a best-in-class partner to the public and private sector,” said Interserve chief executive Debbie White.
Outsourcer Mitie is interested buying out parts of Interserve’s operations. But transferring contracts from one outsourcer to another isn’t the solution.
Interserve is just the latest expose of the sham of privatisation and outsourcing of important public services. The collapse of outsourcing giant Carillion in January 2018 cost an estimated £150 million in public money.
And Capita has been embroiled in a number of high profile failures. A National Audit Office report said last year that Capita’s NHS contracts could have “put patients at risk of serious harm”.
But the Tory government hasn’t learnt from the collapse of private companies. Interserve was handed £660 million in public contracts in 2017-18 and £6 million after announcing £700 million debts and seeking a rescue deal.
GMB union national officer Kevin Brandstatter said, “Ministers have learnt absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public sector contracts.
“Shambolic mismanagement is putting jobs out on the line and services in jeopardy.
“Our public services can’t go on like this.” Firms such as Interserve depend on the public sector to survive—some 70 percent of its annual £2.9 billion came from government contracts.
The last two decades have seen large amounts of council and government services transferred to private companies.
That means services that should be in public control are put into the hands of unaccountable companies and unelected bosses.
Pressure must be applied on the Tories to take services back in house—and Labour should pledge to overturn all privatisation measures.
Promises of a false Dawnus
Construction firm Dawnus also went into administration on Thursday of last week.
Construction works in Swansea and Manchester were halted after Dawnus was handed over to accounting firm Grant Thornton for administration.
Workers who hadn’t been paid abandoned diggers on the £15 million project in Regent Road in Manchester.
Dawnus has a slew of public contracts.
These include building a £12 million redevelopment of the Kingsway road in Swansea, schools and a flood defence scheme in Cardiff.
It has 700 staff across the UK working in construction, development, commercial management, plant hire and recycling.
Its most recent accounts showed it had a turnover of £170 million in 2017.
And it said it was optimistic about its future.
Manchester City Council paid Dawnus almost half a million pounds just days before it went into administration.