The post you are reporting:
Courtesy of the Telegraph, not often Norman Tebbit and I agree on something.
The first thing which struck me about the Carillion affair is that the civil service seems to have changed since my time in office. I am sure that in those days one of my officials would have come long ago to express concerns about the stability of the company and the way in which it was being run. Sadly the conduct of the top management, and indeed that of the auditors, is all too reminiscent to that of their counterparts in the banks which had to be rescued a few years ago.
What on Earth were the members of the Board Audit Committee doing? Did none of them raise any concerns about the state of the company's finances? Then what about the independent auditors? How did they persuade themselves that Carillion's accounts were a true and fair representation of a going concern? Did the non-executive directors question the way the way the company was heading? Or indeed how did the Remuneration Committee persuade itself to authorise large cash payments to executive directors of a company plainly running out of cash?
I have, in the past, expressed my view that the failure to prosecute any of the banks (or their auditors) which had to be rescued during the banking crisis would encourage reckless corporate behaviour. It now seems likely that once again it will be the taxpayers, the shareholders and the ordinary employees who will suffer for the conduct of those at the top of the firm – while the latter get away scot free. I seldom join in the shouts of the disaffected for public enquiries, but the Carillion affair should not be allowed to drift away as just one of those things. It is hard to know whether the wretched practice of the Private Finance Initiative, which was conceived during John Major's premiership and practised so enthusiastically by Gordon Brown, had a role in the Carillon affair, but it is long overdue for the policy scrapheap. At its heart it is hire purchase.
Hire purchase was probably born on the car dealer's forecourt as a profitable way to sell cars to would-be buyers lacking a bank manager ready to advance an overdraft or loan, and was notably expensive for the buyer. PFI was born in the time of John Major's premiership to keep government capital spending on things such as hospitals, out of the reckoning of public sector borrowing. What made it so attractive to the private sector participant was that the PFI contractor for a hospital or school would normally also be the monopoly contractor for maintenance for a period of thirty years.