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Ten years of Carillion putting profits before patients at PFI hospital

This week marks the tenth anniversary of Swindon’s Great Western Hospital (GWH) opening in Swindon, one of the earliest Private Finance Initiative (PFI) build and operate hospitals, and only the second opened by Carillion.

The anniversary was marked today by a dozen GMB shop stewards protesting outside, highlighting the long running industrial dispute between the union and Carillion, over the failure of the company to recognise GMB, the unfair holiday system, and the culture of management bullying, which included years of covering up a system of shakedowns and extortion by supervisors, who terrorised the mainly South Asian women workforce into giving gold, money and other valuables in exchange for shift changes, overtime or holiday approvals. This extortion had been reported to Carillion in at least 2007, and the company was aware of the accusations at director level in at least 2009.

Carillion, was responsible not only for the design, construction and commissioning, but also for on-going operation and maintenance of the  £135 million project. Eric Shaw, in his persuasive book, Losing Labour’s Soul?: New Labour and the Blair Government 1997-2007, discusses how the NHS was taken to the cleaners when negotiating these PFI contracts. Not only did the NHS lack the commercial expertise, and were therefore required to outsource the project negotiations and management at enormous cost; but the contracts for operating the hospitals were developed on a deeply flawed risk model, paying the private companies a premium for assuming risk that was in fact still retained by the NHS as the operator of last resort.

There has to be a suspicion that the subsequent sale of the GWH by Carillion was designed to leverage this advantage, having secured what was probably an excessive original price for the 26 year operational contract, they were able to sell their stake once the real, lower, operational risk was known.

In December 2007, Carillion sold its equity in this project to Land Securities Trillium (LST) along with the Harplands Hospital in North Staffordshire and Glasgow’s Southern General Hospita; being paid £21.5m for the three hospitals. The musical chairs didn’t stop there, as Land Securities then sold Trillium to Telereal in 2009 for £750m to form Telereal Trillium and the 10% stake it had in Trillium PPP Investment Partners fund was then again sold to existing investors in the fund and Semperian PPP Investment Partners was created.

So now it is Semperian who owns the premises and the facilities contract for the Great Western Hospital, but it employs Carillion as a sub-contractor.

Carillion itself was formed by a de-merger from the Tarmac group in 1999, and the corporate rebranding obscured the fact that a construction giant had entered the services market in the public sector. It brought with it the hard-nosed, rapacious and money-grubbing ethos of the construction industry.

There is certainly a compelling similarity between the way Carillion has ignored, belittled and denied the reports of supervisor corruption at the Swindon hospital with the record of Carillion’s construction arm of victimising and blacklisting Health and Safety reps on its building sites. Earlier in 2012, Dave Smith, a  former UCATT safety rep gained admissions in Employment Tribunal of the involvement of Liz Keates, HR Director for Carillion, with the blacklist; and it was Liz Keates who advised GMB representaves in February 2012 that Carillion would not be upholding any part of anyone’s grievance at the GWH, after 109 staff had given strong evidence of supervisor racism and bullying, and a number of staff had given testimony of extortion and shake downs by white supervisors and managers from their non-white staff. Ms Keates said that “there was no evidence” disregarding the testimony of Carillion’s own staff.

The common denominator is a seeming presumption to dismiss staff complaints as nuisance or of no value, even where serious matters of site safety or systematic racism and extortion are involved. Although the Blacklist Support Group had been doing sterling work in exposing the activites of the Construction companies, and UCATT had previously raised the issue with MPs, the blacklisting issue acheived lift off when GMB joined the dots between Carillion’s malpractice at the Swindon hospital, and the history of unlawful blacklisting by the same company  in the construction industry.

It is clear from the evidence being produced to the Scottish Affairs Select Committee investigation that Carillion was involved with the blacklisting Consulting Association from the beginning, and has been one of the most prolific users. However, it is not necessarily the worst company; Sir Robert MacAlpine put up the inital money for the Consulting Association, and their director, Callum MacAlpine chaired the meetings at first. The Chief Officer of the Consulting Association last week gave evidence that it was Balfour Beatty who had the most hardline approach to blacklisting.

However, what makes Carillion different, and which is of particular concern, is that it is a very major player in providing public services, running schools, hospitals, and council services paid for out of the public purse. Carillion are a multi-billion pound business, for example its recent bid to run education services in Stafford would have been worth at least £700 million, and could have been worth £5bn over the project life.

If Carillion fails to conduct itself consistent with the expected ethical standards of the public sector, then it should not be considered for public services contracts.

6 Comments

  1. Imran Khan says:

    I have followed this with interest because of the Asian angle but also the ways in which the payments were made. Were the Carillion supervisors Asians themselves? This type of payment is particularly sub continental and one I have come across before.

  2. Robert says:

    You made the contracts you cannot blame the contractors because labour skewed up the PFI contracts can you, it was the Labour party who offered these vast profits. Maybe the answer lies in not allowing Labour back into power

  3. Andy Newman says:

    Were the Carillion supervisors Asians themselves?

    no

  4. Andy Newman says:

    “This type of payment is particularly sub continental and one I have come across before .”

    This is indeed one of the arguments that Carillion management, and their allies in the trade union movement, have made. Carillion have explicitly said in their report into their second investigation that it is a cultural issue.

    Carillion also implicitly claim a that cultural issues – in Carillion’s own words make them a “very difficult workforce to manage” because they are “overly emotional”, given to “crying and touching”.

    This is langage in an official Carillion report,written in 2012, that could have been lifted straight out of the Colonial era.

    However, remember it was the South Asian staff themselves who reported the practice to Carillion management, asking for protection. And the shop steward, Paulo Fernandes, has made a very strong case that the workers schould not have accept such practices in a developed country like Britain.

  5. Andy Newman says:

    “You made the contracts you cannot blame the contractors because labour skewed up the PFI contracts can you”

    This is a point of such monumental stupidity that it is hard to know how to respond.

    There was an arguable case – although think still misguided, for PFI financing of the design and build, to avoid increasing the PSBR.

    The decision to run services on PFI was always deeply flawed.

    But it is still a reasonable expectation that the contractors obey the law – and the failure of contractors to behave lawfully, or ethically, cannot be placed upon the government.

  6. Robert McKibbin says:

    Carillian have advised all their subcontractor’s that they are withholding all due payments until January 2013 and have not given a reason, the result being that a lot of the smaller contractors will be in a situation where they are unable to pay thier suppliers/employees, does anybody know whats going on?

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