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Preventing the next Carillion: Philip Booth

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The UK has been transfixed by the collapse of Carillion, a construction company which, at the time of its collapse, employed 43,000 employees (20,000 in the UK) and was contracted to carry out 450 projects for the UK government. The company branched out beyond construction and now provides food or maintenance for NHS hospitals, schools, and prisons on behalf of the government. The projects, livelihoods, and pensions of its workforce are threatened as Carillion faces liquidation.

While the government refused a £300 million bailout, questions swirl about why government ministers awarded £1.3 billion in new contracts to the company after it admitted a significant profits warning that designated it as “high risk.” Many on the Left call the debacle a failure of the free market that demands greater nationalization.

“Once the government has decided to provide a road, a hospital, or a school, it has rejected the market,” writes Philip Booth – a professor of finance, public policy and ethics at the UK’s largest Catholic university and a senior academic fellow at the Institute of Economic Affairs (IEA) – in a new essay for Acton’s Religion & Liberty Transatlantic website. “Exactly how it provides the service or infrastructure is a pragmatic decision.”

In addition to sketching out a proposal to prevent the next Carillion, Booth explores the ethical problems posed by hiring private companies to perform tasks for government entities – known in the UK as a “private finance initiative” (PFI):

[T]here is something inherently concerning about PFI and other similar arrangements. Explicit corruption is rare in the UK, but PFI-type projects and large government contracts create huge opportunities for corruption, particularly in countries where it is common. Multi-billion-dollar contracts between corrupt governments and companies that have no concern about ethics is what might be called a potential “occasion of sin.” Some people have become very rich from relationships between the private sector and the government.

Read his full essay here.

(Photo credit: Terry Robinson. This photo has been cropped. CC BY-SA 2.0.)

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Rev. Ben Johnson Rev. Ben Johnson is Senior Editor at the Acton Institute.

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