Cheapest bid first 'putting services at risk'


MPs investigating the Carillion insolvency have blasted the Government for putting public services at risk.

In the final report of their inquiry, the Work and Pensions and Business, Energy and Industrial Strategy select committees concluded that the Government’s austerity-led approach to procurement – and, by implication, also the funding of local authorities – had a part to play in the 'catastrophic crash'.


The committees accused the Government of ‘nurturing a business environment and pursuing a model of service delivery which made such a collapse … a distinct possibility’.

In their report, the MPs write: ‘The Government’s drive for cost savings can itself come at a price: the cheapest bid is not always the best.

'Yet companies have danced to the Government’s tune, focussing on delivering on price, not service, volume, not value.’

MPs’ anger also focused on the largest auditing firms for their failure to spot the danger signs in Carillion’s accounts and business model, and the auditors’ regulators for their failure to adequately police them.

The MPs’ report say these combined elements allowed Carillion to become a ‘giant and unsustainable corporate time bomb,’ adding: ‘The mystery is not that it collapsed, but that it lasted so long.’

They continue: ‘In these circumstances, when swathes of public services are affected … we have a semi-professional part-time system that does not provide the necessary degree of insight for Government to manage risks around service provision … the consequences of this are clear.’

Carillion provided councils with everything from facilities management to cleaning and catering, leaving a number of local authorities paying 20% more to cover the delivery of contracts left unmanned by the company.

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