Have to say im stunned that PFI contracts are still being awarded. No reason for it but ideology. At the moment HM Gov could borrow at very low rate the money in order to build these hospitals /schools etc and then tender the service contracts. Instead they are awarding PFI contracts which the winning contractor uses its Capital to build the places and ties you into a 30 year service contract at top shilling !! Of course HM Gov use the old illusion re budget as the actual amount repaid per year shows up as a lower amount on the borrowing sheet because not only is it spread over decades but the payments and service payments will be in the NHS/ Schools budget lines.
Outsourcing can work well. IMO all schools should have their support services outsourced--they are a nightmare and i shudder when i have to do anything with schools re audits or compliance reviews.
The people monitoring these contracts have to understand what the feck they are looking at and what to do when it starts going wrong---but often its left to a junior manager. Rest assured the contractor KNOWS their contract.
Just herd that some of the sub contractors to Carillion were on 120 day payment on receipt of invoice !! what a piss take 60 days is taking the piss--- they will be on 30 payment for the base contract and 60 days for "additional" works.
Bring things back"in house" isnt the answer --thats just ideology. Outsourcing is a support and thats it a support
The simple reason is that the civil service is too set in its ways and cannot afford to bring experts on board to run things in house. Look at other countries where they run public services and public works in house and they will have well paid experts in their field working for the government. Meanwhile the civil service has lost a lot of talent and simply cannot compete with large private companies for the best talent and they seem to be unable to change from the mindset of outsourcing everything. Of course if there was political will to give them the money, time and resources to change then maybe things will get better, but the civil service is notoriously resistant to change.
I'm loving this thread. It's a subject I know nothing about, and it's great to see (on the whole) posters with actual experience, from a range of backgrounds, all saying roughly the same thing. Makes you wonder how we got into this mess (can probably guess greed has something to do with it) and possible ways to get out of it. Just hope there is the political will to do something.
It's because we've seen what is on the horizon and even though I have always made a noise about how they are run, trying to stop them haemoraging money who listens to me? It certainly isn't any of my senior management, those pricks always know better yet spent most of 2017 apologising for things that they had overseen and behaved abhorrebtly towards people who had tried to put their hand up and stop some of the recent disasters. The amount of times I get called negative for just calling problems out and having foresight has ground me down.
Nothing will change though, as @Goonerhater says, there is £60 billion tied up, same as with the contractors working on Grenfell tower, who was quality checking and auditing them? Because it wasn't the fucking government, it was the very same people who were doing the work. Now they are hardly going to piss in their own bathwater are they but this moronic culture of subbing everything including, tragically, responsibility out means that those who hand these contracts out are not keeping any reigns or control over who they sub to. And they have a duty to do that. That's what is criminal, none if those at Carillion on the board or in senior positions will be negatively affected by this, give it a month this will all be forgotten by the mainstream, same as Grenfell has fallen off the front page and the vermin responsible will not have suffered any consequence to prevent others behaving in the same way.
Same for me from a Public Sector perspective, my career has suffered as a result. Agree with everything you have said and that is looking from a different side.
I would add that I have made bids for (small fry) contracts where I know we would lose because we were honest about costs and I know that the tenders have been awarded where it would be impossible to deliver at the winning cost in relation to outcomes.
This, this and this again. When the bottom line is cost, it looks good everywhere but where it actually matters. And safety is often the victim!
Have to say im stunned that PFI contracts are still being awarded. No reason for it but ideology. At the moment HM Gov could borrow at very low rate the money in order to build these hospitals /schools etc and then tender the service contracts. Instead they are awarding PFI contracts which the winning contractor uses its Capital to build the places and ties you into a 30 year service contract at top shilling !! Of course HM Gov use the old illusion re budget as the actual amount repaid per year shows up as a lower amount on the borrowing sheet because not only is it spread over decades but the payments and service payments will be in the NHS/ Schools budget lines.
Outsourcing can work well. IMO all schools should have their support services outsourced--they are a nightmare and i shudder when i have to do anything with schools re audits or compliance reviews.
The people monitoring these contracts have to understand what the feck they are looking at and what to do when it starts going wrong---but often its left to a junior manager. Rest assured the contractor KNOWS their contract.
Just herd that some of the sub contractors to Carillion were on 120 day payment on receipt of invoice !! what a piss take 60 days is taking the piss--- they will be on 30 payment for the base contract and 60 days for "additional" works.
Bring things back"in house" isnt the answer --thats just ideology. Outsourcing is a support and thats it a support
The simple reason is that the civil service is too set in its ways and cannot afford to bring experts on board to run things in house. Look at other countries where they run public services and public works in house and they will have well paid experts in their field working for the government. Meanwhile the civil service has lost a lot of talent and simply cannot compete with large private companies for the best talent and they seem to be unable to change from the mindset of outsourcing everything. Of course if there was political will to give them the money, time and resources to change then maybe things will get better, but the civil service is notoriously resistant to change.
Changing a mindset that has been in place at least 25/30 years (in my experience) is not going to happen overnight. I worked on government contracts for a number of years in the late 1980s/early 1990s. The theory at that time was that you were "buying in" expertise to use on specific projects, which was cheaper than training up your own experts. It was also the case that these "experts" wouldn't want to be civil servants so there was no possibility of employing them directly.
Have to say im stunned that PFI contracts are still being awarded. No reason for it but ideology. At the moment HM Gov could borrow at very low rate the money in order to build these hospitals /schools etc and then tender the service contracts. Instead they are awarding PFI contracts which the winning contractor uses its Capital to build the places and ties you into a 30 year service contract at top shilling !! Of course HM Gov use the old illusion re budget as the actual amount repaid per year shows up as a lower amount on the borrowing sheet because not only is it spread over decades but the payments and service payments will be in the NHS/ Schools budget lines.
Outsourcing can work well. IMO all schools should have their support services outsourced--they are a nightmare and i shudder when i have to do anything with schools re audits or compliance reviews.
The people monitoring these contracts have to understand what the feck they are looking at and what to do when it starts going wrong---but often its left to a junior manager. Rest assured the contractor KNOWS their contract.
Just herd that some of the sub contractors to Carillion were on 120 day payment on receipt of invoice !! what a piss take 60 days is taking the piss--- they will be on 30 payment for the base contract and 60 days for "additional" works.
Bring things back"in house" isnt the answer --thats just ideology. Outsourcing is a support and thats it a support
The simple reason is that the civil service is too set in its ways and cannot afford to bring experts on board to run things in house. Look at other countries where they run public services and public works in house and they will have well paid experts in their field working for the government. Meanwhile the civil service has lost a lot of talent and simply cannot compete with large private companies for the best talent and they seem to be unable to change from the mindset of outsourcing everything. Of course if there was political will to give them the money, time and resources to change then maybe things will get better, but the civil service is notoriously resistant to change.
Changing a mindset that has been in place at least 25/30 years (in my experience) is not going to happen overnight. I worked on government contracts for a number of years in the late 1980s/early 1990s. The theory at that time was that you were "buying in" expertise to use on specific projects, which was cheaper than training up your own experts. It was also the case that these "experts" wouldn't want to be civil servants so there was no possibility of employing them directly.
The mindset of a lot of organisations is that their management is too incompetent to manage so they buy in expertise which frequently doesn't deliver. The Government wastes cash on an eye-watering scale - some of the contracts they sign up to are beyond ludicrous.
I've never understood the point of employing managers who can't manage?
Heard today on Radio2 of a contractor to Carillion who is owed £120k. Said that they had been doing business with them for a number of years & wouldn't sign their contract due to the many restrictions they place. The main ones being:
1) You have to wait 100 days before you get paid (if you ever do)
2) if you want to be paid sooner than 100 days then you have to pay a fee !!
3) They don't pay anything from October to the end of the year.
I also heard yesterday a few callers who were employed by Carillion & how one guy didn't get paid for 2 months, the 3rd month they deducted too much tax & was told he had to claim it back from HMRC. The 4th month they paid him too little & the 5th month they were deducting car fuel allowances even though they still hadn't supplied him with a vehicle & he was paying all his own petrol. He left soon after that..........
Heard today on Radio2 of a contractor to Carillion who is owed £120k. Said that they had been doing business with them for a number of years & wouldn't sign their contract due to the many restrictions they place. The main ones being:
1) You have to wait 100 days before you get paid (if you ever do)
2) if you want to be paid sooner than 100 days then you have to pay a fee !!
3) They don't pay anything from October to the end of the year.
I also heard yesterday a few callers who were employed by Carillion & how one guy didn't get paid for 2 months, the 3rd month they deducted too much tax & was told he had to claim it back from HMRC. The 4th month they paid him too little & the 5th month they were deducting car fuel allowances even though they still hadn't supplied him with a vehicle & he was paying all his own petrol. He left soon after that..........
All par for the course, they doubled the invoice period years ago from 30 to 60 days. They are wankers of the highest order
Wow, their pension shortfall went up 100% last year alone and is 5x greater than their actual profit. They have £2.5B in money to cover £3.3B in amounts owed down the line, most of that due to management finally changing their assumptions about how their liability is calculated.
I would not be shocked if a big part of this bankruptcy is just to get out of their retirement liabilities. I expect to see a lot of that nonsense here in the US over the next several years. This is one of the big downsides to having artificially low interest rates for so long. Since many pensions buy bonds to fund pension liabilities, the return on those bonds cannot keep pace with the costs of retirement funding and the gap widens and widens.
A lot of companies (and local governments) would have much lower financial viability if real pension assumptions were required. It's perhaps the biggest ticking financial time bomb in the western world.
Heard today on Radio2 of a contractor to Carillion who is owed £120k. Said that they had been doing business with them for a number of years & wouldn't sign their contract due to the many restrictions they place. The main ones being:
1) You have to wait 100 days before you get paid (if you ever do)
2) if you want to be paid sooner than 100 days then you have to pay a fee !!
3) They don't pay anything from October to the end of the year.
I also heard yesterday a few callers who were employed by Carillion & how one guy didn't get paid for 2 months, the 3rd month they deducted too much tax & was told he had to claim it back from HMRC. The 4th month they paid him too little & the 5th month they were deducting car fuel allowances even though they still hadn't supplied him with a vehicle & he was paying all his own petrol. He left soon after that..........
I thought they recently increased the 100 day retainer to 120?
I know blokes who run small companies who get a lot of work off councils and the government and they are on long retainers an all. One of em supplies signage for the PSNI in Belfast and always struggles to get weighed out. Point being the government are no better than a lot of these big companies when it comes to getting paid
Outsourcing can work well. IMO all schools should have their support services outsourced--they are a nightmare and i shudder when i have to do anything with schools re audits or compliance reviews.
When I was teaching, support services were outsourced to Crapita... enough said!
I worked for a company who although on a smaller scale the Carillion (around 10,000 employees) ran themselves on a similar line it seems. Putting in unrealistically low tenders which lost them money in the hope of making it back later on but never doing so. It’s like the proverbial house of cards in the end and the little man so to speak it the one that suffers most.
I was lucky as a much bigger company bought them out and we were all transferred across but most people at Carillion won’t have that good fortune
I worked for a company who although on a smaller scale the Carillion (around 10,000 employees) ran themselves on a similar line it seems. Putting in unrealistically low tenders which lost them money in the hope of making it back later on but never doing so. It’s like the proverbial house of cards in the end and the little man so to speak it the one that suffers most.
I was lucky as a much bigger company bought them out and we were all transferred across but most people at Carillion won’t have that good fortune
They put in the low tender knowing variations/extras will be required and then charge them at super high rates to bring profit back around.
It seems to be the flaw that companies like Carllion have to get bigger and bigger and make more and more money until they implode. A bit like the banks prior to 2008. It seems one big thing that has changed is that you can no longer be too big to fail.
Wow, their pension shortfall went up 100% last year alone and is 5x greater than their actual profit. They have £2.5B in money to cover £3.3B in amounts owed down the line, most of that due to management finally changing their assumptions about how their liability is calculated.
I would not be shocked if a big part of this bankruptcy is just to get out of their retirement liabilities. I expect to see a lot of that nonsense here in the US over the next several years. This is one of the big downsides to having artificially low interest rates for so long. Since many pensions buy bonds to fund pension liabilities, the return on those bonds cannot keep pace with the costs of retirement funding and the gap widens and widens.
A lot of companies (and local governments) would have much lower financial viability if real pension assumptions were required. It's perhaps the biggest ticking financial time bomb in the western world.
Not a choice by Carillion, the liabilities are calculated on prescribed accounting standards using AAA bond yields, this is so all company pension liabilities are marked to market on the same assumptions rather than spurious ones that would mislead investors. Carillion have no control over the figure.
The liabilities valued by the scheme are based on UK gilt yields, not bond yields, which being lower than bond yields means the liability to be paid for is actually higher. The UK law does not allow a mismatch whereby assets are invested in equities for a higher return on the justification that if the company becomes insolvent there is no source of funds to make good the difference between the realisable value of the equities and the cost of buying enough gilts to guarantee payment of all present and future pensions. This is enforced rigidly because it reduces the amount the Pension Protection Fund must find to make up the losses to guarantee pension payouts.
It's a vicious circle, the law to protect employees creates greater costs for the company by restricting exposure to equity returns which in turn leaves less money to support the business. It creates more demand for gilts than there is a supply so the price of gilts goes up meaning pensions schemes are forced to buy an investment guaranteed to give a negative return relative to inflation. This in turn means they have to inject more capital to buy more gilts to make up the loss in returns. Add to the mix quantitive easing that surpasses gilt yields and you have the perfect storm. Pension deficits will never be repaid from company revenues, the deficits are accounting figures and the deficits will evaporate when QE ends and the return on equities and the return on gilts are aligned in terms of relative risk.
The position in the US will not be as extreme unless you also have regulation on how far liabilities have to be matched by gilt valuations.
re schools ---they dont do compliance !! 38 schools checked only 18% compliance----thats health and safety STATUTORY compliance.No worries tho they have their devolved budgets untill someone dies that is.
or the time a Head Mistress had great pleasure in telling everyone how she had all the fire doors replaced for a fraction of what Propety Dept(me) had quoted---how fecking quiet it went when i pointed out none of there new doors were fire rated and they had to be replaced and lets forget the fact she had bypassed procurement rules anyway
or being summoned to explain the outsourced service provider poor performance at The Monthly Head Teachers meeting ----only myself and the Account Manager turned up !! when i asked where they were they were all to busy to attend "a Property meeting"----i had to explain it was their monthly meeting.
The reeason for non perfomance ? 80% of the complaints were from schools who had oppted out of the Service Agreement !! Therefore the Service Provider didnt have any time scale to respond or actually undertake the works -----as said before know your contract the supplier will
Schools are there to teach .outsourcing should look after the support services and independent audits check on compliance ---fail that and their contract is in jeopardy
Interesting about the schools. They are probably imagining that the council still sorts these things out for them despite them no longer being under the council's management or control and lacking the expertise that the team doing this beforehand would have had. It's specialist stuff like this which is why schools should never have been privatised in the first place and certainly won't have the sort of skills and experience to manage loads of external contracts, at least initially.
edited to add: this is also a case where a small school would be far better outsourcing to specialists than relying on a deputy head trying to fit it in with all their other duties
The whole 'transfer of risk' idea is where huge amounts of money can be made and lost - completely unnecessary - need to get back to traditional contracting - let builders build, designers design and clients pay a fair price and not try and offload all risks all the time - whether private or public clients - Grenfell and a whole host of other issues are related to this in many ways - just a quick correction, didn't realise Amey were part of carillion, they do work at mod hq with skanska but no involvement at Colchester - Sodexo have that and can see them 'helping' fill the carillion hole
Regardless of how Grenfell was built it was still signed off by a BCO. If contractors didn't pass risk down god knows what I'll spend my day doing!
But that's part of the problem - that sign off ticks boxes but has a clerk of works type role been undertaken? - somebody who has no vested interest other than that things have been done properly - building control don't know - they sign off on the assurance that the design and build has been completed in accordance with the spec that the contractor has responsibility for - turkeys voting for Christmas scenario.
Have to say im stunned that PFI contracts are still being awarded. No reason for it but ideology. At the moment HM Gov could borrow at very low rate the money in order to build these hospitals /schools etc and then tender the service contracts. Instead they are awarding PFI contracts which the winning contractor uses its Capital to build the places and ties you into a 30 year service contract at top shilling !! Of course HM Gov use the old illusion re budget as the actual amount repaid per year shows up as a lower amount on the borrowing sheet because not only is it spread over decades but the payments and service payments will be in the NHS/ Schools budget lines.
Outsourcing can work well. IMO all schools should have their support services outsourced--they are a nightmare and i shudder when i have to do anything with schools re audits or compliance reviews.
The people monitoring these contracts have to understand what the feck they are looking at and what to do when it starts going wrong---but often its left to a junior manager. Rest assured the contractor KNOWS their contract.
Just herd that some of the sub contractors to Carillion were on 120 day payment on receipt of invoice !! what a piss take 60 days is taking the piss--- they will be on 30 payment for the base contract and 60 days for "additional" works.
Bring things back"in house" isnt the answer --thats just ideology. Outsourcing is a support and thats it a support
The simple reason is that the civil service is too set in its ways and cannot afford to bring experts on board to run things in house. Look at other countries where they run public services and public works in house and they will have well paid experts in their field working for the government. Meanwhile the civil service has lost a lot of talent and simply cannot compete with large private companies for the best talent and they seem to be unable to change from the mindset of outsourcing everything. Of course if there was political will to give them the money, time and resources to change then maybe things will get better, but the civil service is notoriously resistant to change.
The country's wealth is virtually all private money - we are told we are the fifth richest country in the world but don't own most of our own country. In the 50's / 60's when taxes were high, we were a rich country and could afford to pay for things to be done properly. Outrageous all these public services being outsourced - its gone way too far.
I have worked in the Fire Protection (Alarms) Industry all my working life, the last 27 of which as a Director of my own company. We had two types of clients "End Users" meaning our contract was with the owner etc and "Facility Companies" such as Carillion, MITIE, JCA Etc.
I could tell you stories on here that would keep you awake at night.
Fire alarms not working, insufficient cover/protection, serious faults on systems. All reported but never passed onto the client. The Facility companies just brushed it all under the carpet.
In addition to this due to not being paid on average for 60 days, but in most cases 90 days we regularly had to put them on stop however once again the client was totally unaware of this.
We had situations where we would not attend a call out due to non payment so the Facility Company would send an air conditioning engineer or a plumber to look at the fire alarm fault with no spare parts.
I have worked in the Fire Protection (Alarms) Industry all my working life, the last 27 of which as a Director of my own company. We had two types of clients "End Users" meaning our contract was with the owner etc and "Facility Companies" such as Carillion, MITIE, JCA Etc.
I could tell you stories on here that would keep you awake at night.
Fire alarms not working, insufficient cover/protection, serious faults on systems. All reported but never passed onto the client. The Facility companies just brushed it all under the carpet.
In addition to this due to not being paid on average for 60 days, but in most cases 90 days we regularly had to put them on stop however once again the client was totally unaware of this.
We had situations where we would not attend a call out due to non payment so the Facility Company would send an air conditioning engineer or a plumber to look at the fire alarm fault with no spare parts.
I believe every word mate. Do you get labelled a troublemaker or negative when you point these colossal failings out as well?
I have worked in the Fire Protection (Alarms) Industry all my working life, the last 27 of which as a Director of my own company. We had two types of clients "End Users" meaning our contract was with the owner etc and "Facility Companies" such as Carillion, MITIE, JCA Etc.
I could tell you stories on here that would keep you awake at night.
Fire alarms not working, insufficient cover/protection, serious faults on systems. All reported but never passed onto the client. The Facility companies just brushed it all under the carpet.
In addition to this due to not being paid on average for 60 days, but in most cases 90 days we regularly had to put them on stop however once again the client was totally unaware of this.
We had situations where we would not attend a call out due to non payment so the Facility Company would send an air conditioning engineer or a plumber to look at the fire alarm fault with no spare parts.
I believe every word mate. Do you get labelled a troublemaker or negative when you point these colossal failings out as well?
Yes. I am happily out of the main firing line now as I sold the business in February last year.
The buying company asked me to stay on for a settling in period but I am not involved at the coalface.
Total bastard company , crooks , con men and fraudsters Never complete a contract to the finish due to them subbing it out and taking the sub contractor to the brink by not paying them Hope the directors get a jail term but in the land of funny handshakes alas it won’t happen Meanwhile people’s lives , pensions plans have been hit
So one of the blokes who was responsible and accountable for what Carillion were up to and made an absolute packet off the back of it has just been appointed in a position of extreme seniority overseeing the nuclear power station at Hinkley Point.
I'm just trying to work out who he's shagged or how on earth a level of failure as catastrophic as what has happened with Carillion can be forgotten and forgiven so quickly. Then I shook the cloth from my ears and remembered that's how it works. Jobs for the fucking boys.
And I was right, the media have found other things to get falsely excited and outraged over and have moved on from the collapse of Carillion and how many people and businesses this has fucked over
The corruption in this country is dreadful, just because it's not in brown envelopes we seem to ride high with the virtuous.
Once you get to be a company director of a PLC, you have a job for life somewhere. Just move on once it all goes tits up.
Rewarding failure, disgusting.
How the f*ck would you feel as a shareholder when you see some of these names getting appointments as CEO though? I'm surprised people internal to these decisions allow it to happen, to be entirely honest.
What's even stranger is that Carillion knew things were fucked, and were a couple of weeks away from going under, yet still decided to move the appointment of their intended CEO (Andrew Davies) back to Jan (today actually.) from April. What's the betting that the previous CEO got a nice pay-off in that movement?
I also see that it looks as though people will get less than 1% of what their owed; how does a company have liabilities of over a hundred times it's assets? Or am I taking a purely naive look at how post-liquidation renumeration works? Meanwhile, how on earth is Keith Cochrane still getting £750,000 p/annum until July? Surely if the company is insolvent, it can't pay out salaries either..?
The corruption in this country is dreadful, just because it's not in brown envelopes we seem to ride high with the virtuous.
Once you get to be a company director of a PLC, you have a job for life somewhere. Just move on once it all goes tits up.
Rewarding failure, disgusting.
How the f*ck would you feel as a shareholder when you see some of these names getting appointments as CEO though? I'm surprised people internal to these decisions allow it to happen, to be entirely honest.
What's even stranger is that Carillion knew things were fucked, and were a couple of weeks away from going under, yet still decided to move the appointment of their intended CEO (Andrew Davies) back to Jan (today actually.) from April. What's the betting that the previous CEO got a nice pay-off in that movement?
I also see that it looks as though people will get less than 1% of what their owed; how does a company have liabilities of over a hundred times it's assets? Or am I taking a purely naive look at how post-liquidation renumeration works? Meanwhile, how on earth is Keith Cochrane still getting £750,000 p/annum until July? Surely if the company is insolvent, it can't pay out salaries either..?
Too big to fail. Once a company owes money to the banks the banks have to keep stumping up in fear of pulling the plug and losing what they've already loaned. Companies have always got glossy plans showing how things are going improve, they just need another £billion and all will be well. These companies always have a long lead in time from when they have to spend the cash to when they see a return, so it's easy to explain cashflow needs to a bank in terms of this lag, but if the cash doesn't materialise a huge hole suddenly appears. Instead of shareholders paying in money as equity, Carillion borrowed the money and 30% of the company's assets were supplied as debt before it started to try an reduce exposure in 2016.
I think in Carillion's case they lost a wedge on a huge Middle East project which tipped the scales at the same time other projects also went pear shaped.
I know someone who worked at Carillion and staff were told last year they could only claim £25 expenses for 24 hr meals subsistence if staying overnight. It emerged from a conversation he had subsequently with a senior executive bragging about a celebratory meal after winning a contract that they one night they blew £300 for two at the Shard restaurant, not including the champagne.
Capitalism was based on risk being taken by entrepreneurs with mostly their own money. Sadly it has deteriorated into capital being controlled by a professional management class who assume no risk whatsoever who are rewarded disproportionately for success rarely attributable to their skill and rewarded just as disproportionately for failure.
Comments
I've never understood the point of employing managers who can't manage?
1) You have to wait 100 days before you get paid (if you ever do)
2) if you want to be paid sooner than 100 days then you have to pay a fee !!
3) They don't pay anything from October to the end of the year.
I also heard yesterday a few callers who were employed by Carillion & how one guy didn't get paid for 2 months, the 3rd month they deducted too much tax & was told he had to claim it back from HMRC. The 4th month they paid him too little & the 5th month they were deducting car fuel allowances even though they still hadn't supplied him with a vehicle & he was paying all his own petrol. He left soon after that..........
Wow, their pension shortfall went up 100% last year alone and is 5x greater than their actual profit. They have £2.5B in money to cover £3.3B in amounts owed down the line, most of that due to management finally changing their assumptions about how their liability is calculated.
I would not be shocked if a big part of this bankruptcy is just to get out of their retirement liabilities. I expect to see a lot of that nonsense here in the US over the next several years. This is one of the big downsides to having artificially low interest rates for so long. Since many pensions buy bonds to fund pension liabilities, the return on those bonds cannot keep pace with the costs of retirement funding and the gap widens and widens.
A lot of companies (and local governments) would have much lower financial viability if real pension assumptions were required. It's perhaps the biggest ticking financial time bomb in the western world.
I know blokes who run small companies who get a lot of work off councils and the government and they are on long retainers an all. One of em supplies signage for the PSNI in Belfast and always struggles to get weighed out. Point being the government are no better than a lot of these big companies when it comes to getting paid
I was lucky as a much bigger company bought them out and we were all transferred across but most people at Carillion won’t have that good fortune
All par for the course, they doubled the invoice period years ago from 30 to 60 days. They are wankers of the highest order
This if anything is what the government should be looking into payment should be no longer than 35 days from end of month.
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Dangerous game if it doesn't come off.
The liabilities valued by the scheme are based on UK gilt yields, not bond yields, which being lower than bond yields means the liability to be paid for is actually higher. The UK law does not allow a mismatch whereby assets are invested in equities for a higher return on the justification that if the company becomes insolvent there is no source of funds to make good the difference between the realisable value of the equities and the cost of buying enough gilts to guarantee payment of all present and future pensions. This is enforced rigidly because it reduces the amount the Pension Protection Fund must find to make up the losses to guarantee pension payouts.
It's a vicious circle, the law to protect employees creates greater costs for the company by restricting exposure to equity returns which in turn leaves less money to support the business. It creates more demand for gilts than there is a supply so the price of gilts goes up meaning pensions schemes are forced to buy an investment guaranteed to give a negative return relative to inflation. This in turn means they have to inject more capital to buy more gilts to make up the loss in returns. Add to the mix quantitive easing that surpasses gilt yields and you have the perfect storm. Pension deficits will never be repaid from company revenues, the deficits are accounting figures and the deficits will evaporate when QE ends and the return on equities and the return on gilts are aligned in terms of relative risk.
The position in the US will not be as extreme unless you also have regulation on how far liabilities have to be matched by gilt valuations.
or the time a Head Mistress had great pleasure in telling everyone how she had all the fire doors replaced for a fraction of what Propety Dept(me) had quoted---how fecking quiet it went when i pointed out none of there new doors were fire rated and they had to be replaced and lets forget the fact she had bypassed procurement rules anyway
or being summoned to explain the outsourced service provider poor performance at The Monthly Head Teachers meeting ----only myself and the Account Manager turned up !! when i asked where they were they were all to busy to attend "a Property meeting"----i had to explain it was their monthly meeting.
The reeason for non perfomance ? 80% of the complaints were from schools who had oppted out of the Service Agreement !! Therefore the Service Provider didnt have any time scale to respond or actually undertake the works -----as said before know your contract the supplier will
Schools are there to teach .outsourcing should look after the support services and independent audits check on compliance ---fail that and their contract is in jeopardy
edited to add: this is also a case where a small school would be far better outsourcing to specialists than relying on a deputy head trying to fit it in with all their other duties
I could tell you stories on here that would keep you awake at night.
Fire alarms not working, insufficient cover/protection, serious faults on systems. All reported but never passed onto the client. The Facility companies just brushed it all under the carpet.
In addition to this due to not being paid on average for 60 days, but in most cases 90 days we regularly had to put them on stop however once again the client was totally unaware of this.
We had situations where we would not attend a call out due to non payment so the Facility Company would send an air conditioning engineer or a plumber to look at the fire alarm fault with no spare parts.
The buying company asked me to stay on for a settling in period but I am not involved at the coalface.
Hope the directors get a jail term but in the land of funny handshakes alas it won’t happen
Meanwhile people’s lives , pensions plans have been hit
I'm just trying to work out who he's shagged or how on earth a level of failure as catastrophic as what has happened with Carillion can be forgotten and forgiven so quickly. Then I shook the cloth from my ears and remembered that's how it works. Jobs for the fucking boys.
And I was right, the media have found other things to get falsely excited and outraged over and have moved on from the collapse of Carillion and how many people and businesses this has fucked over
Once you get to be a company director of a PLC, you have a job for life somewhere. Just move on once it all goes tits up.
Rewarding failure, disgusting.
What's even stranger is that Carillion knew things were fucked, and were a couple of weeks away from going under, yet still decided to move the appointment of their intended CEO (Andrew Davies) back to Jan (today actually.) from April. What's the betting that the previous CEO got a nice pay-off in that movement?
I also see that it looks as though people will get less than 1% of what their owed; how does a company have liabilities of over a hundred times it's assets? Or am I taking a purely naive look at how post-liquidation renumeration works? Meanwhile, how on earth is Keith Cochrane still getting £750,000 p/annum until July? Surely if the company is insolvent, it can't pay out salaries either..?
I think in Carillion's case they lost a wedge on a huge Middle East project which tipped the scales at the same time other projects also went pear shaped.
I know someone who worked at Carillion and staff were told last year they could only claim £25 expenses for 24 hr meals subsistence if staying overnight. It emerged from a conversation he had subsequently with a senior executive bragging about a celebratory meal after winning a contract that they one night they blew £300 for two at the Shard restaurant, not including the champagne.
Capitalism was based on risk being taken by entrepreneurs with mostly their own money. Sadly it has deteriorated into capital being controlled by a professional management class who assume no risk whatsoever who are rewarded disproportionately for success rarely attributable to their skill and rewarded just as disproportionately for failure.