Failure of the Middlemen

Aside from the obvious drum beating by the hard left over the vulnerability of the private sector, the collapse of Carillion and concerns over the future of similar business Interserve raises some interesting issues over public sector procurement. The problem is that government only appears to be able to deal with big corporations (and charities) and their procurement processes are geared towards them.

I have previously written about the trials of the North Somerset procurement process which was an arduous task for all the small businesses who took part. I have little doubt that central government administered schemes will be even worse, leading to companies such as Carillion becoming experts in filling in forms to gain work. Sadly their expertise doesn’t seem to have stretched to costing the projects properly, but the bus and coach industry is littered with the corpses of organisations who have been similarly foolhardy.

The problem is that many socialists are jumping on the failure of Carillion as an excuse as to why the whole process should be taken over by the public sector, when this is not a logical conclusion. What would be logical would be for some project management to have happened in the public sector rather than contracts being handed to Carillion to further subcontract. This would involve them dealing with more than one organisation, something which would spread the risk involved and also the fruits of the labours.

This whole situation illustrates what i feel is wrong with British politics – Conservatives generally favour huge corporations from which their voters can take substantial dividends. Labour under Momentum or Corbyn leadership is pushing for Public Sector acquisition of everything under the sun. The Lib Dems are keen on extra regulation which would lead to even longer forms to fill in before anyone could bid to carry out work and have the same result as the Conservative approach because only large companies would have the ability to absorb the required time and cost of compliance.

Meanwhile in the middle of it all, projects and services are being starved of cash and no party seems interested in advocating the infrastructure needed to deliver projects and services effectively. Government on every level needs to learn how to deal effectively with Small to Medium sized Enterprises (SMEs), which tend to pay taxes and spend their money locally rather than rattling it off to the Cayman Islands via Bermuda. Sadly, nobody in politics is promoting this approach which would benefit far more people than just those with investment portfolios.

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