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18 March 2019
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Ill Winds

Interserve’s woes may not have had the impact of Carillion, but have nonetheless provided fuel for the anti-outsourcing lobby
Ill Winds

Within minutes of the announcement that shareholders had rejected Interserve’s deleveraging plan – and that as a result the company was heading for a pre-pack administration process – the familiar lines were appearing on social media and news sites.

Phrases such as “…raises further questions over the government’s strategy towards outsourcing” quickly appeared in the media, while Labour wasted no time in linking the latest “disaster” to the Carillion collapse a year ago.  According to shadow minister for the Cabinet Office, Jon Trickett, Interserve’s administration “shows that the government is not prepared to change their dogmatic attachment to outsourcing, and it is costing the country dearly”.

No matter that Interserve’s position appears, for the moment at least, to have been far better managed than Carillion, with a clear plan in place to get it through administration and out the other side in a way that has seen it insist it remains ‘business as usual’.

And no matter that rumours suggest Interserve remains an attractive proposition. Monday saw a swirl of rumours suggesting that rivals such as Mitie and Serco could be considering bids to buy the firm. This is made all the more likely given that the pre-pack sale means Interserve is now owned by its lenders, who are unlikely to want to hold onto the company as shareholders for too long.

As far as outsourcing and PPP is concerned in the UK, it would seem that the die is cast: the private sector is bad; the public sector is good. As Trickett put it: “Labour will end this crony capitalism and put an end to this reckless outsourcing once and for all.”

Such talk only underlines the need for the industry to engage with government, the public sector and politicians from across the spectrum to develop the conversation beyond the binary choice of public good, private bad. It is why events that we at Partnerships Bulletin have hosted recently with contractor Amey are important in bringing together different elements of the public and private sectors so that they can learn from each other and be open and honest about where the market can go from here.

There are some in the market who much prefer to keep their heads down and get on with whatever work they can get. And while that might be one way of working, the truth is that if Labour were to come to power and follow through on its (clearly ill-thought-through and still sketchy) plans to end outsourcing, there would be a sudden lack of opportunity of any kind for these private sector players.

Politics will always play a part in the delivery of government infrastructure, but trying to avoid the debate and hoping it will go away is no longer an option.

Speaking of Amey, there are plenty of rumours circling about that firm’s future as well, with owner Ferrovial known to be keen to offload it. there have even been some suggestions that the Spanish contractor could be willing to stop supporting it, which coming so close on the back of Interserve’s woes –and just a year after Carillion’s collapse – could prove to be a devastating blow to the industry.

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Ill Winds

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Interserve’s woes may not have had the impact of Carillion, but have nonetheless provided fuel for the anti-outsourcing lobby

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