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Carillion’s collapse shows why governments should try downsizing their contractors

The wide-ranging impact of losing a big provider underscores the advantages of giving smaller businesses a chance.

Do you ever pause somewhere in the middle of the working day, between your third brainstorming session with marketing and your fifth interminable phone call with Brad from the personnel team in Chicago, and feel like your job has become so disparate, so scattered to the wind, you barely know what you do anymore?

If so, spare a thought for the outsourcing behemoth Carillion — which this week announced it is going into liquidation — and its minders in the British government. Created at the turn of the century when it split from the materials company Tarmac, the construction company swiftly bought up a string of other entities. Eventually it became the public sector contractor with a thousand faces. It built hospitals. It ran customer support services. It plonked down 32,000 school meals in front of kids across the country every day. The future of all these and more is now in flux.

There are many lessons to be learned from this fiasco, from improving how contracts are drafted and managed to, as many on the left in particular argue, reconsidering what tasks should be performed by the private rather than the public sector.

But one part of the solution, as former public accounts committee chair Margaret Hodge, West Midlands mayor Andy Street, the Scottish Building Federation and others have said this week, is spreading the burden of government work across a wider range of providers — particularly by making it easier for small and medium enterprises (SMEs) to win jobs.

When things are going well, governments love dealing with big businesses like Carillion. A range of disparate tasks can be brought together. Managing familiar relationships with a few experienced suits is less daunting than leaping between upstart new suppliers in a dozen sectors.

It’s no surprise that Carillion isn’t the only such leviathan. The security company G4S, for example, has vast amounts of government work in its in-tray. It runs five of England and Wales’s 14 private prisons and as recently as December signed with the DWP what it called “one of the largest integrated security contracts of its kind awarded in the UK.”

Britain isn’t alone in this either. We could look as far afield as Bridge International, an education provider in charge of over 400 schools across Africa and Asia.

But when it all goes wrong, government’s one simple solution becomes dozens of complex problems. Ministers have decided not, in the strict sense of the phrase, to “bail out” Carillion. But they have committed to supplying the money needed to run the public services it delivered.

“Wait and see,” Hodge told the BBC on Monday night, “I think there will be a massive cost to the taxpayer from what has happened today.”

So governments around the world — including our own — are trying to make their roster of suppliers more diverse. In Australia, for example, they’ve come up with a no-nonsense approach over their federal IT services, limiting the maximum size of a government IT contract to 100 million Australian dollars.

That’s accompanied by a target to increase the proportion of the IT budget spent with SMEs to about 38 per cent.

Elsewhere, the public sector is using this purchasing power not only to spread risk but to help meet its other goals. In Manchester, city authorities have pushed not only to buy small, but to buy local. In

2007 the city decided to move all its procurement activities into one department, focused in particular on SMEs within its boundaries. As we reported last year, about 50 per cent of this budget now goes to smaller business, and the proportion going to companies in the city has leapt by 20 per cent. The city says it has created 1,500 jobs.

Meanwhile, Toronto, Canada, is thinking about its private sector contracting as a way to push through social change. The city is looking to direct $30 million annually into companies led by people from minority communities as part of its overall push to drive down poverty.

And looking to new suppliers can be a way for governments to encourage innovation and nurture unusual businesses. The “Innovative Solutions Canada” programme was announced last year. The Canadian government advertises problems it has for which it can’t find an existing answer on the market.

Businesses suggest how they could help and the winning ones get the contract. The programme is modelled on America’s Small Business Innovation Research(SBIR) project. Successful products supplied there range from training equipment for explosives detection dogs to an ocean-powered fresh water generator.

A 2016 National Audit Office report acknowledged that “for many years, government has sought to harness the potential benefits of involving SMEs in the public sector marketplace,” noting that the government has a target in place to spend a third of its procurement budget on SMEs by 2020. But it added that barriers still exist, among them a lack of information on upcoming bids, “disproportionate” demands during the bidding process, and a low “departmental appetite for risk.” It also stressed that, since SMEs aren’t suitable for all contracts, the government should do more to work out where they could best be used.

So Carillion’s collapse should prompt ministers and officials to focus hard on this agenda. Most of all, a catastrophe like this should lead them to think twice about when to fall back on an old partner, and when to give new up-and-comers a try.

Josh Lowe is a writer for apolitical, a global platform for public servants.

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Michael Carrick is the “Geordie Pirlo” that England misunderstood

The Manchester United legend’s retirement announcement should leave Three Lions fans wondering what if?

That it came in the months leading up to a World Cup arguably added an exclamation point to the announcement of Michael Carrick’s impending retirement. The Manchester United midfielder, who is expected to take up a coaching role with the club afterwards, will hang up his boots at the end of the season. And United boss Jose Mourinho’s keenness to keep Carrick at Old Trafford in some capacity only serves to emphasise how highly he rates the 36-year-old.

But Carrick’s curtain call in May will be caveated by one striking anomaly on an otherwise imperious CV: his international career. Although at club level Carrick has excelled – winning every top tier honour a player based in England possibly can – he looks set to retire with just 34 caps for his country, and just one of those was earned at a major tournament.

This, in part, is down to the quality of competition he has faced. Indeed, much of the conversation around England’s midfield in the early to mid-noughties centred on finding a system that could accommodate both box-to-box dynamos Steven Gerrard and Frank Lampard.

As time went on, however, focus shifted towards trequartistas, advanced playmakers and those with more mobile, harrying playing styles. And the likes of Jack Wilshere, Ross Barkley, Jordan Henderson and Dele Alli were brought into the frame more frequently than Carrick, whose deep-lying capabilities were not utilised to their full potential. That nearly 65 per cent of Carrick’s England caps have come in friendlies shows how undervalued he was. 

In fairness, Carrick does not embody similar characteristics to many of his England midfield contemporaries, including a laudable lack of ego. He is not blessed with lung-busting pace, nor is he enough of a ball-winner to shield a back four solo. Yet his passing and distribution satisfy world-class criteria, with a range only matched, as far as England internationals go, by his former United team-mate Paul Scholes, who was also misused when playing for his country.

Rather, the player Carrick resembles most isn’t English at all; it’s Andrea Pirlo, minus the free-kicks. When comparisons between the mild-mannered Geordie and Italian football’s coolest customer first emerged, they were dismissed in some quarters as hyperbole. Yet watching Carrick confirm his retirement plans this week, perfectly bearded and reflecting on a trophy-laden 12-year spell at one of world football’s grandest institutions, the parallels have become harder to deny.

Michael Carrick at a press event ahead of Manchester United's Champions League game this week. Photo: Getty.

Where other players would have been shown the door much sooner, both Pirlo and Carrick’s efficient style of play – built on patience, possession and precision – gifted them twilights as impressive as many others’ peaks. That at 36, Carrick is still playing for a team in the top two of the top division in English football, rather than in lower-league or moneyed foreign obscurity, speaks volumes. At the same age, Pirlo started for Juventus in the Champions League final of 2015.

It is ill health, not a decline in ability, which is finally bringing Carrick’s career to a close. After saying he “felt strange” during the second-half of United’s 4-1 win over Burton Albion earlier this season, he had a cardiac ablation procedure to treat an irregular heart rhythm. He has since been limited to just three more appearances this term, of which United won two. 

And just how key to United’s success Carrick has been since his £18m signing from Tottenham in 2006 cannot be overstated. He was United’s sole signing that summer, yielding only modest excitement, and there were some Red Devils fans displeased with then manager Sir Alex Ferguson’s decision to assign Carrick the number 16 jersey previously worn by departed captain Roy Keane. Less than a year later, though, United won their first league title in four years. The following season, United won the league and Champions League double, with Carrick playing 49 times across all competitions.

Failing to regularly deploy Carrick in his favoured role – one that is nominally defensive in its position at the base of midfield, but also creative in providing through-balls to the players ahead – must be considered one of the most criminal oversights of successive England managers’ tenures. Unfortunately, Carrick’s heart condition means that current boss Gareth Southgate is unlikely to be able to make amends this summer.

By pressing space, rather than players, Carrick compensates for his lack of speed by marking passing channels and intercepting. He is forever watching the game around him and his unwillingness to commit passes prematurely and lose possession is as valuable an asset as when he does spot an opening.

Ultimately, while Carrick can have few regrets about his illustrious career, England fans and management alike can have plenty. Via West Ham, Spurs and United, the Wallsend-born émigré has earned his billing as one of the most gifted midfielders of his generation, but he’d never let on.

Rohan Banerjee is a Special Projects Writer at the New Statesman. He co-hosts the No Country For Brown Men podcast.