Carillion told ministers a three-month loan would enable it to restructure and raise new commercial funding © Reuters
Experimental feature

Listen to this article

00:00
00:00
Experimental feature

This article is from today’s FT Opinion email. Sign up to receive a daily digest of the big issues straight to your inbox.

The collapse of Carillion, the UK construction giant, has raised questions about whether Britain’s chosen model of outsourcing public sector contracts — from building hospitals and motorways to providing school meals and running prisons — to private companies has reached the end of the road. Critics say that taxpayers end up with a bad deal in which they overpay for projects and services that could and should be delivered by the public sector.

Not so, says Bronwen Maddox. In an opinion piece for FT Weekend she argues that while the Carillion case has highlighted evident problems with the outsourcing model, it is not an argument to dispense with the practice altogether. Since the UK began outsourcing public sector work three decades ago taxpayers have actually reaped benefits in a number of areas, not least in getting cheaper services thanks to the much improved negotiating skills of civil services.

This does not mean that everything works well — as the Carillion case demonstrates. Bronwen writes that the lesson of the past 30 years has been that outsourcing is not right for all public services. Catering, yes; probation services and hospital cleaning, no. What is needed now, she says, is a detailed review of what can be successfully outsourced and what cannot. There also needs to be a focus on the capitalisation of the outsourcing industry and of the margins it offers. Above all we should not confuse the failure of one mismanaged company with the failure of a whole idea.

Goldman becalmed: If any bank should be able to thrive on the volatility than engulfs us now it is Goldman Sachs. Yet, writes William Cohan, the reputedly savviest risk manager on Wall Street has been unable to make money in its core fixed-income, currency and commodity operations. Doom-mongers speculate whether Goldman is out of touch. But for all their present problems, you would be wrong to write Goldman off just yet, says William. 

The ties that bind: Emmanuel Macron’s offer to lend Britain the Bayeux Tapestry was a wonderful gesture and the memorable highlight of his visit to Britain. But in the long run, writes the historian Robert Tombs, such symbols of friendship rarely make any difference. National interests are what really count. And in an era of Brexit those are now being redefined.

Overbearing Amazon: It is difficult not to love Amazon, writes Tim Harford. Its astonishing prowess has given consumers boundless choice and wonderful convenience, putting our heart’s desires at our fingerprints. In fact it is all quite terrifying, says Tim, who examines the case for breaking up the behemoth of online retailing.

Best of the week

Carillion’s downfall shows dumb money knows no borders— Patrick Jenkins

The rise of the superstar company— Rana Foroohar

In defence of plastics— Penny Sparke

Global recovery brings opportunities for emerging markets— Martin Wolf

The Bank of England’s anti-Brexit bias endangers its credibility— Paul Marshall

Europe’s biggest test will come in Poland— Gideon Rachman

Donald Trump, Davos and the special relationship— Philip Stephens

Kids and tech: whose responsibility is it anyway? — Roula Khalaf

Emmanuel Macron serves Theresa May a reminder of past glories— Janan Ganesh

Power will always trump mutual interest in the Brexit talks— Chris Giles

Populist swing alarms financial titans— Gillian Tett

Trump fails to spot one of London’s great property deals— Frederick Studemann

Brexit sketches for the remake of the Bayeux Tapestry— Robert Shrimsley

Best of the rest

Babe, What Are You Doing? — Julianne Escobedo Shepherd in Jezebel about the journalistic ethics of running the Aziz Ansari story

Emmanuel Macron’s Bayeux tapestry loan is one in the eye for Brexiters — Martin Kettle in the Guardian on the political undercurrents of France's loan of the ancient work of art

Just for fun: Build your own Bayeux tapestry

I Used to Insist I Didn’t Get Angry. Not Anymore. Leslie Jamison in the New York Times magazine writing about the importance of female rage

A Year of Donald Trump in the White House — Adam Gopnik in the New Yorker about Trump, and a year that was 'worse than we want to pretend'

What you've been saying

Blame for NHS pressures pinned on ‘Brexitosis’— letter from Nigel Lanning, Chorleywood, Herts, UK

"Sir, I think that I have at long last identified why the National Health Service is experiencing high levels of patient pressure, especially at the present time ( “NHS ‘winter crisis’ dominates first PMQs of 2018”, January 10). My theory is that there has been a “Brexitosis” pandemic affecting certain sectors of the UK population, which is leading to an influx of visitors to doctors’ surgeries and, possibly, accident and emergency departments as well. From my observations the important symptoms are depression and irrational concern for the future — these are topics that have given rise to much comment of late in a broader context. In order to test this theory as soon as possible I would suggest that it would be very easy to establish a control group, all of whom would give up reading the Financial Times for a short period of time."

Comment by Iron Knee on Robert Shrimsley's column, Brexit sketches for the remake of the Bayeux Tapestry

"Special offer in Wetherspoons for Brexit pensioners. Kronenbourg 1066. Two for one between 9am and 11am."

Carillion shows pension trustees must speak up— letter from Rory Murphy, West Sussex, UK

"The ability of trustees to understand the strength of the employer covenant cannot be overstated. Strong governance, clear leadership, clarity of purpose and robust questioning of employers and advisers alike are all vital requirements for pension fund trustees. Ideally those qualities can be exercised within a constructive relationship with the scheme sponsor. But if it means rattling corporate cages from time to time, trustees must not shirk from doing so if they are to fulfill their fiduciary duties. This must prompt other pension trustees to challenge their employers more effectively in 2018."

Today's opinion

Person in the News: David Letterman, the chat show host who won over America
Former ‘Late Show’ star fronts Netflix series to woo the online, on-demand generation

Anna Mae Hays, the first female US general, 1920-2018
A pioneer, yet she was more interested in service than feminism

Goldman caught between calm markets and a stormy White House
If the picture is reversed it will help Wall St but could prove unsettling for Main St

Shared aims mask ‘eternal interests’ for Britain and France
Macron takes the upper hand as London and Paris seek to reset their relationship

FT Collections: Carillion’s collapse: risk and failure
The construction company’s failure will be felt beyond Britain. What signs were missed?

Free Lunch: Macroeconomics can be more open without losing rigour
Make it more expansive and liberal, but keep it unified 

The collapse of Carillion is not an argument to end outsourcing
Contracting out public services works better in some sectors than in others

FT Alphaville: The Novo Banco debacle and the rule of law in Europe

FT Alphaville: Guest post: The invisible run-off

FT Alphaville: Stop calling GBP the Great British Peso, says DB

Opinion today: Mr Trump goes to Davos
The US president’s presence will probably stoke anti-American feelings on the continent

Undercover Economist: The case for ending Amazon’s dominance
Antitrust authorities should not be making life easy for incumbents

EM Squared: Oil price touches record high in Russian rouble terms
Nigeria, Angola, Kazakhstan and Azerbaijan enjoying record prices in local currency

FT View: Carillion’s failure does not vindicate Corbyn
Problems with PFI are no reason to kill off private sector provision in the UK

FT View: Myanmar is fraught with danger for Rohingyas
The world must not stand by if the refugees are forcibly returned

FT View

FT View: Apple, animal spirits, and Trump’s tax cut The risk is that stimulating a strong economy leads to inflation

FT View: Talks between the two Koreas are worth a try Olympic courtship could yield results but scepticism is merited

The Big Read

The Big Read: M&A: Ferrero spreads its chocolate empire The group has signed a $2.8bn deal with Nestlé, but is it taking on too much in the US?

Copyright The Financial Times Limited 2018. All rights reserved.